Is Private Money Lending Reshaping the Market for Mortgages?

When investors are looking for opportunities to purchase and make renovations to real estate, their financial options can be limited. When it comes to traditional mortgage funders, their interest may divert due to the extensive structural repairs and modeling that may be required for the property. However, mortgage lenders’ reluctance has created an increase in the national market for private money lending options. Private money lenders now have a lucrative opportunity to collaborate with investors in private money loan investments.

Is Private Money Lending Reshaping the Market for Mortgages?

Private money lenders don’t sell their loans in the secondary market and don’t underwrite loans using external guidelines. When borrowers select private money lending firms, it is generally because the property being financed may have fallen out of specific guidelines. This would make the renovator ineligible for a conventional money loan. For instance, there could be a subject property that could be in such a state of disrepair that conventional mortgage lenders may deny the funds’ request. However, a private money lender can provide the necessary funds to acquire and reconstruct the property. The popularity of private money lending options has grown significantly for numerous reasons. A few of these reasons include faster financing, a lower chance of credit score consideration, and quick approval.

The private money lending industry has provided an increased amount of options for borrowers. This is because a private loan is normally issued for as long as it takes to reconstruct and rehabilitate the property. During this time, the property is set out on the market, and the borrower then searches for a buyer. Once the property is being remodeled to the point that it falls into conventional guideline standards, the borrower can then rent out the place and use conventional methods to refinance their property with a long-term loan. This means that the private money loan can be paid off and replaced with a conventional loan at the end of the remodeling and reconstruction.

Private money lenders also focus more on the before and after the value of a property. However, they do consider the surety of a solid exit strategy by the borrowers. When it comes to private money loans, they need to see that the project makes sense. If the project seems viable, they would determine how the property will be sold and how their private loan would be paid. Mortgage lenders are known to gain a significant amount of valued investors this way while guaranteeing the property is of good value.

If you’re looking to make your real estate dreams a reality, Money Loans Wilmington, NC, would be the right option for you. BridgeWell Capital is one of the best private money lending organizations in the state. We guarantee super-fast and hassle-free services for client satisfaction. Contact us now for inquiries!