Private lenders often specialize in a loan category. Here are some examples:
Commercial vs Residential: Texas mortgage lender usually specialize in one type of property in order to focus their investments.
Refinancing for debt alliance vs. makeover, etc. Texas mortgage lender sometimes choose their product specialty based on why the client is looking for a mortgage. Some lenders provide funds only to clients who are refinancing with the intention of buying another property.
Preference for urban areas: Large urban centers are more attractive to private lenders because these areas have higher real estate value.
Preference for the region where they live: Lenders are more comfortable investing in the area where they live since they can personally value the property. However, this is not always the case.
What is the deadline for obtaining a private loan?
The approval usually arrives less than a week and sometimes arrives as soon as a few days after the application. The processing of the loan application and the release of funds takes about 2 to 3 weeks.
Private mortgage lenders want their clients to be able to transfer their loan to a traditional lender within one year to 18 months. They specialize in fast financing and must therefore be able to collect their investment within the specified time period. Therefore, a Texas mortgage lender will try to help the client get help from a traditional lender, which is also in the client’s best interest.
What will be the criteria of private lenders?
Private lenders have stricter guidelines on certain factors compared to traditional lenders to offset the added risk.
Type and value of the property. This is probably the maximum essential issue to be approved by way of a personal lender. The mortgaged belongings must be in proper condition and undergo a rigorous assessment earlier than you get approval. When you have a horrific credit rating, you are considered a risky purchaser and personal Texas mortgage lender want to ensure that their funding is at ease if they default on your mortgage.
Returned. Your income can fall under two categories. Verifiable Income is preferred by lenders using notices of assessment. Unverifiable income, is common for self-employed or commissioned employees, and therefore lenders must make an income estimate by taking the average wage of your industry.
Deposit (if you buy). With a private mortgage lender, the minimum loan value ratio is 85% on the property. This means that you must make a down payment of at least 15% to obtain loan approval. If Lenders can also take this fact as a sign that you can manage your personal finances well.
Equity (if you refinance). If you are going to refinance, a Texas mortgage lender can allow you a maximum loan-to-value ratio of 85%. Regarding a minimum stake in your property as a down payment, there is none.
What if I have a guarantee on my mortgage?
If you have signed up to have a mortgage guarantee with your bank, you have ‘promised’ the entire equity on your home to this bank. A mortgage broker can help you by putting you in touch with the right private mortgage lender for you. Despite this burden, it may be worthwhile to find a lender who can provide you with a better mortgage rate for your financial needs.
In summary, the main difference between private lenders and mortgage lenders is the fact that private lenders consider properties on a borrower’s ability to repay their loan, not just on credit history. Each client case is evaluated individually taking into account the facts mentioned above.