When it comes to buying real estate, you may have several options for funding, including real estate private loan programs. While these loans can offer attractive qualities, many borrowers believe myths that stop them from looking into funding option.
Myth: Real estate private loan programs are only for large-scale investors.
While private loan programs are most commonly sought by investors, you can have access to a real estate private loan program even if you are just the typical borrower. The terms on private loans are different and harder for some average borrowers to manage. For instance, you may be able to get a 25-year term at a bank, but a private lender may expect you to pay back the funding plus interest in as little as a few years.
Myth: A private lender usually has more stringent requirements for loan approval.
Private lenders are usually most focused on one aspect of loaning you money: whether or not they can make a quick profit. Since loans are usually shorter-term, most lenders are not going to be so preoccupied with your credit rating and financial history. On another note, private lenders will often offer to finance properties that traditional banks will not. For example, you may find it hard to get a traditional mortgage on a home that is in need of repairs if you are planning on flipping a real estate property. But a private lender will be more apt to loan you the money if they see the potential to profit.
Myth: Getting a private loan can be much more time-consuming.
Obtaining funding through a real estate private money loan program is actually usually less time-consuming. You may not get approval on a traditional loan for as long as 45 days, but most private money loans can be approved much faster. In fact, one reason investors prefer to work with private lenders is that they can oftentimes get the money they need faster.
Myth: You can only get one private loan to fund one real estate property.
On the contrary, unlike with traditional lending institutions, you may be able to get financing from more than one real estate private loan program at a time. For example, if you find one lender willing to offer 50 percent of what you need, you may find another that will fund the rest. Of course, in order for multiple lenders to be feasible, you do have to be careful to stay within legal requirements to protect everyone involved.
Contact a lender like Precision Capital - Your Private Money Source to learn more.Share