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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
Tips for Finding Best Private Mortgage Lender
Today’s post is for those investors who have a few private mortgage lenders lined up or maybe a few private mortgage lenders that are coming to you and work with you for your real estate deal.
A private mortgage lender is a person or entity who provides you a private mortgage loan that is not through a financial institution like a bank or a lender.
It could be funds acquired through friends, family members, businesses, acquaintances, or any other private source.
Maybe you have two or three different private mortgage lenders and once you meet them how do you decide which is the right private mortgage lender to work with for your real estate purchases.
That is what we are going to cover in today’s post.
1 - Ask Source of Funds.
The first thing that you got to do is ask a lot of questions. Do not start throwing deals at them.
There are many questions that you can ask them like, What is the source of the money? The reason why you want to ask that question to the private mortgage lender is to understand how you want to structure that deal.
For example, if the source of the private mortgage that you are going to receive from the private lender is from a HELOC, the interest rate on the loan might be higher as the lender have to make the payment and earn profit by giving the loan.
2 - Know Their Goals
If you have a private mortgage lender that is looking to retire in two years Vs a private mortgage lender who is young and happens to have enough funds to invest for your private mortgage, these are two separate goals.
Try to know if they have short term or long term goal, which eventually will help you set structure for your private mortgage.
3 - Look To Create a Win-Win Situation
The next thing that you want to do to pick the right private home loan lender is to make sure that they are on board for a win-win situation with you.
There are predatory lenders out there that pose private money and you don’t want to work with such lenders.
To enroll the private mortgage lenders into win-win conversations, you might want to talk about monthly payments.
The next thing that you want to talk about is the term and rate for your private mortgage.
Make sure the rate and term are according to your financial budget and also benefiting the lender making it a perfect win-win situation.
You can get favorable loan terms to ensure that the private home loan lender’s goals are met and he is making an investment that is worth his money.
Conclusion
The bottom line is, the way you evaluate a private mortgage lender is to ask lots of questions and to make sure you structure win-win.
There might be lots of hurdles for you to jump through, weeks or months to get the closings are not winning for you, High-interest rates are not winning for you.
Wins for you are velocity to close. It might also be a win for you to be able to get into a deal that is just a favorable rate and terms or just knowing that the money is there as soon as you need it.
Be prepared to open up your door and show them what is in it for them. And that is how you pick the right private mortgage lender.
You made an excellent point when you said I should choose a private mortgage blended that has a rate and term that is a match to my financial situation. I plan on getting a home loan soon to afford the house I want to buy for my family in the suburbs. I want to choose a lender who’d give me favorable loan terms, so thanks for the tips.