Private lending for real estate is quickly becoming the only way for many real estate investors, home buyers, and owners to obtain financing on their properties. Private lending for real estate has been around since the dawn of time, but many home buyers and investors have not known how to utilize it. In the recent boom years, private mortgage loans were largely neglected as subprime and exotic mortgages were easy to qualify for and offered lower rates. However, with the implosion of so many mortgage institutions large and small, and the continued tightening of underwriting guidelines, private lending for real estate is now the only option for many Americans who face credit or liquidity problems.

The government claims they are making big efforts and changes to help individuals and families keep their homes or to get onto the property ladder. However, these programs have failed miserably and have not been viable for most of the country. In fact underwriting guidelines and lending criteria for traditional home loans are the most stringent they have been in decades.  When it comes to conventional loans, FHA is the only viable program still standing for much of the population, yet now requires incredibly restrictive credit, income and appraisal requirements.

These tough lending guidelines have been holding back growth by preventing many homeowners from refinancing, pushing them further into foreclosure as well as preventing first time home buyers from qualifying for financing. These guidelines have also crushed plans and opportunities for many real estate investors because they rely on quick approvals in order to be able to work profitably and right now private lending for real estate is the only thing keeping them going.

So what are the differences between private mortgage loans and traditional home loans? Private mortgage loans are based primarily on the equity in the property to be financed not on your credit, income, and assets. This means that private mortgage loans can easily be qualified for by those with bad credit and gaps in income. It is true that a few years ago, you could qualify for private mortgage loans as long as you had a pulse. These days you will have to expect that private lenders will at least want to see a copy of your credit report to make sure you do not have huge federal tax liens or are currently filing for bankruptcy. Loan to value for private home loans are traditionally lower than on conventional loans however you will find that you can often receive additional funds for making repairs and improving a property based on it’s ARV (after-repair-value). One thing is for sure, there is limited paperwork to have to wade through to get approved for private mortgage loans. Forget the reams of paper full of fine print, you will likely only need to fill out a few pages of basic information and sometimes will not even need an appraisal. Applying for private lending for real estate also generally means getting an approval in hours instead of weeks or months.  Private mortgage loans also enable you to close quickly and negotiate huge savings on the purchase price of properties.

Some of you reading this may have thought about selling your home and carrying back seller financing as an option. This is becoming a popular trend in order to facilitate a quick sale at a higher price. Once the deal closes, you can quickly turn around and sell that loan on NoteFlo’s website.  In today’s uncertain market, homeowners, investors, borrowers, and brokers are quickly learning that private real estate lending is an excellent alternative to traditional bank loans to obtain a quick, hassle free private loan or refinance.