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Is Private Mortgage Financing The Better Option?

Most traditional mortgages are borrowed from banks and other financial institutions, but did you know that private mortgage financing also exists? Individuals, e.g. investors or sellers, may have a private mortgage and this has many advantages for both the sellers and the buyers as well as any third party investors.

Anyone can offer private mortgages, being a professional in the real estate sector or part of a financial institution is not necessary. If you are a homeowner that is not having much luck selling your home or someone who does not qualify for traditional bank loans, this could be the best option. For third party investors, private financing is also a popular choice. This is because they can charge higher rates of interest than normal mortgage providers.

With private mortgages, the seller retains the title of owner until the loan has been entirely paid back. It is a relatively low risk endeavor for sellers because if the buyer ends up defaulting on the mortgage, they keep their property plus all the money that has already been paid.

For buyers, it is the perfect option when traditional mortgage loans are unavailable and poor credit history is the cause. If you are a buyer with poor credit, private mortgages allow you to rebuild your credit history, gather equity and get a positive repayment record. In a lot of cases, those with a private mortgage can refinance their property further down the line and get a traditional mortgage loan with lower rates once credit history has been improved through the private mortgage.

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