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What is a Private Mortgage Lender?

A private individual or a small company that makes specialized real estate loans for particular classes of property is referred to as a private mortgage lender. A private lender usually works with borrowers who have problems obtaining mortgage loans through conventional channels. Private loans are typically short-term or bridge loans for an amount that are mainly secured by using the property as collateral. This specialized niche in the mortgage lending industry has grown in recent years, due to the turmoil in the financial markets and the difficulty of obtaining conventional loans. Bridgepoint Funding

Interest Rates for Private Loans

Private mortgage loans are offered at higher interest rates as compared to banks, because of the additional risk involved with these loans. Even though private loans come with higher interest rates, many high-risk borrowers prefer them because of the difficulties involved in securing conventional loans. The risk to the lender in these deals is offset by higher equity requirements for securing the loan, typically at least 30%. Private money borrowers are not limited to individuals; higher-risk companies also work with private lenders because the requirements and guidelines for conventional loans have become increasingly strict.

Uses for Private Money Loans

A borrower can use the private money loan for many different purposes. He or she might refinance an existing mortgage, purchase more property, or construct improvements on commercial land. The loans can also be used to reduce the negative impact of a borrower’s foreclosure or bankruptcy proceedings. The loan can also improve chances of qualifying for other loans to purchase additional parcels of land.

Features of Private Mortgage Deals

A private mortgage deal is based primarily on the lender’s analysis of the hard assets of the borrower — primarily the underlying property used as collateral. These transactions involve features such as partial property deed releases, borrower participation, and interest-only loan repayments. They are usually accomplished with a much quicker turnaround time than a commercial mortgage. Private mortgage money is available for both primary mortgages and second mortgages, although the second mortgage interest rates will be considerably higher.

The Importance of an Exit Strategy

Another feature important to a private mortgage lender is the borrower’s exit strategy. The borrower should have a detailed and well-thought-out plan in place to repay the entire amount of the loan in one year or less. Sometimes this means sale or refinance of the whole property, or sometimes just a part of the property. Private mortgage loans are very important sources of money for borrowers facing dire circumstances or struggling with poor credit profiles.

Find Ideal Mortgage Broker

A mortgage broker is the professional expert when it comes to property finance. In the past, there were no brokers that serve as your go-between with the lender. Instead, financial institutions and banks would offer their own products directly to borrowers or borrowers transact straight to their preferred mortgage institution. However, with the increase of the lending and borrowing market, the need for mortgage brokers became important and

The expert services of a mortgage broker became very valuable not only among first time home buyers but also among seasoned buyers and investors. Since there are many available choices offered by banks and other financial institutions in securing a mortgage loan, the process of the task of choosing which institution to go with can be certainly difficult and confusing. This is where the services of a specialist mortgage broker become highly indispensable.

With the large number of professional brokers available these days, the question is, “how do you determine the ideal mortgage broker and make sure you pick the right one?” How do you ensure the broker you chose can provide you the most beneficial services?

Mentioned below are some qualities an ideal mortgage broker should have. Make sure you check these qualities against the broker you are considering.

  1. He or she should offer you whole market advice, which means that the service they offer is not restricted by just the list of lending firms or banks they are connected with or the ones that offer them huge amount of commissions. In other words, they should have access to numerous options on lenders so that you can easily find the one that suits your situation.

Your preferred specialist must be able to look beyond the interest rate and make comparisons on overall cost of the mortgage. This way you can easily arrive at the best possible mortgages on home loans.

  1. He or she should be able to make the process of securing a loan faster. He or she should be able to give you the expert guidance and help in getting your paperwork in on time and get a move on the application process.

  1. Make sure that your preferred broker is not only providing you information about the various mortgage options but also sharing helpful tips on which option to go with considering your particular situation.

  1. The right professional will also be able to help you determine your financial capability for paying off a specific mortgage and at the same time get you pre-approval from certain lenders. By having pre-approval, you will certainly make a clearer choice.