Online Financial Tips

So the happy days of having achieved home ownership have long gone from you. Now it is about keeping your head above water and with this, that, or the other, a financial booster from a company that does private mortgages sounds like just what the doctor ordered. Or does it? Of course to really know, you first have to determine if you have enough equity in your home for private investor to offer a loan to you.

Most of us are familiar with the public conventional prime and sub-prime loans made to borrowers as mortgages through banks and financial institutions. Such loans are scrutinized from the borrower’s income-to-debt ratios, one’s creditworthiness, and the home’s value. Such loans also take quite a while to process, typically 60 to 90 days.

The alternative to a conventional mortgage comes from a private mortgages company or individual that issues loan to you and mortgage so long as there is sufficient equity in your home. In this way, your home is collateralized such that in the event you default on paying the mortgage, the lender will be paid back their investment and interest. Loans of this nature are determined rapidly; in literally 24 hours you would have an answer on getting the loan or not.

A private mortgages company charges a premium interest rate since they are not bound by regulation and do issue loans quickly. Interest rates between 11 and 18% are industry standard and apparently accepted as just by the fact that the loan is not bogged down by conventional time-lines and scrutiny of the individual needing the loan and the home’s value. Such scrutiny can result of denial of the loan based on one’s credit history alone. Private mortgages are granted outside of the consideration of one’s credit; they are wholly related to the home’s equity. If equity is not in the home, this type of loan will not work.

One thing to be aware of for a private mortgage is that the payback is demanded in a very short time frame than a conventional loan, typically as little as six months up to two years.

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