Why Using Private Money for Real Estate Makes Perfect Sense
If you have your eye on a property but have a less than enviable credit history, private money can help you own your desired property. Whether you are looking forward to moving in with your family to a new home or want to boost your finances through real estate investment, private money will provide you the cash necessary to close the deal. The private, non-institutional investors offer a great opportunity to make your dreams a reality. Following are some reasons why using private money for real estate makes perfect sense.
Less Preparation
You do not need to gather myriad financial documents, like bank statements, property documents, credit history reports, and paycheck stubs, to apply for a loan. All you need is a security or collateral to apply for a private money loan.
Quick Approval
Banks and other institutional lenders need to go through and double-check all your documents and records, as well as the viability of your deal before they can approve your loan. This process can take 3 to 4 months. A private money lender can approve your loan within days.
Better Deals
Private money offers you fast access to cash. While your competitors might be getting their mortgage approved from a bank, you can make an all-cash offer. This allows you to get your favorite property at a discounted price. With private money, you can be sure you will make the best offer and the deal will not slip through.
Credit Score Does Not Matter
Banks require a minimum credit score to approve your financing application. For a private money lender, your creditworthiness is inconsequential. The non-traditional lending sources forward the loan considering the merits of your real estate deal. Moreover, the private money loan does not show up on your credit report, therefore your score remains unaffected.
Full Control
If you get a loan approved from a traditional institution, they dictate many of the terms of the real estate deal. Using private money for real estate, frees you up and gives you control. If you are planning to resell the acquired property, you can make offers without the hassle of the property being qualified by the bank, beforehand.
New Partnerships
You do not need to team up with a bank or a nagging partner to gather necessary finances. They can get too involved and hinder your chances of brokering a profitable deal. With their limited involvement, private money lenders may prove valuable partners. If you want to purchase more property in future, their business know-how and connections can help.
No Prepayment Penalties
When you get a mortgage from a bank, you are expected to pay back within a particular period. If by good fortune, you are able to pay your loan off earlier, you are penalized for it. This can unjustly dictate your financial decisions. Private money lenders offer quick and repercussion-free exit strategy.
Flexible Financing
Mortgages and other financing options offered by financial institutions have rigid structures and payment plans. You can forge a good relationship with a private moneylender allowing you two to strike a deal that is suited to both of your needs. You do not necessarily have to pay monthly. The terms and conditions of the loan can be tailored for easy repayment.
Money-Saving Loan
You need a sizable down payment on your mortgage. Using private money saves you money, as private money lenders generally demand no down payment. They do not ask for shared profits or points. Moreover, private money gives you a chance to fund the purchase of defaulted papers.
The benefits of using private money for real estate are undeniable, as it is a hassle-free and lucrative way to finance your property purchase.