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Private Money Mortgages as opposed to a Public Lender

Are you trying to improve your business? Do you wish to finance your business like a professional? Are you turned down by conventional lenders? If yes, you should borrow from a private lender! Voila, you read it right! Over the past few years, private lenders have become famous amongst borrowers who don’t satisfy credit requirements. There are marked differences between private and conventional lenders. Every business needs money and the assistance of loan lenders. As an investor, you should figure out if private money mortgages or public lenders suit you better. Here is a quick walk through few differences between the two.


#1 Rate of Interest


In most cases, banks cost lower rates of interest than private money mortgages. Banks set their interests in comparison to other traditional financing bodies. This is makes banks a viable option for borrowers. On the other hand, private lenders work in projects that are risky. This is why they expect a significant amount of compensation. So, if you opt for private money mortgages, you are likely to pay more interest rates.


#2 Loan to Value


The Loan to value (LTV) ratio differs from one bank to another. Most financial institutions lend between 60 and 85 percent the property’s actual value. Meanwhile, private money mortgage lenders cap only 60 to 65 percent LTV. When it comes to LTV, both these financial bodies work similarly. Banks tend to pay on the property’s value, whereas private lenders focus on the property’s repair value. That is why the amount lend by private lenders can come out very big!


#3 Execution Time


Execution time is an interesting parameter that differentiates private money mortgage from public lenders. In a perfect environment, banks are capable of closing loans between 30 and 45 days. However, the real world works very differently. This is why loan approval can take between 60 and 100 days! Alas, this is a very long time for borrowers who are going through foreclosures and bankruptcy. Private lenders have the ability to close loans in few days. In fact, they have the freedom to give you a better picture of certainty at an earlier stage.


#4 Deals!


Banks are considered as an ideal option for monetary deals. They are safe and simple for people with stable incomes and values. Private money mortgages like to offer easy loans, but they work with borrowers who are suffering money issues.


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