As stated above, private lenders loan money but are not part of a bank or affiliated with a government agency, which means that they can offer more flexible loan terms.
When you decide to invest in real estate, you may immediately seek out a traditional mortgage lender like a bank or credit union, but they may not have the terms and rates that you need. In this instance, private mortgage lenders like Visio Lending are an excellent option. We can provide property investors, including self-employed borrowers, with competitive interest rates and advantageous loan terms.
Today, we'll discuss how a private lender differs from a traditional financial institution and the benefits of working with private lending companies for your real estate needs.
How to Get a Private Mortgage
Private mortgages have a very similar process to those from traditional lenders. You'll complete an application and undergo a credit check. The private mortgage lender will then inform you as to how much you can borrow from them and on what terms. You'll sign a contract, which will tell you your interest rate, how much you will need to pay each month, and how long the loan will last.
As with traditional lenders, the private mortgage lender will place a lien on your property, meaning that they can repossess it should you fail to pay. Your private lender will also have the right to demand full payment on your outstanding balance if you fail to make your payments. As they are not bound by the same standards as banks, you have fewer protections should your financial situation change and you're no longer able to pay off your loan. This goes both ways, however: a private mortgage is also riskier for the lender, so they will charge higher rates.
Find a Private Mortgage Lender
You will need a private mortgage lender who can offer a streamlined application process, low interest rates, and fast closing time. Given that you have less protection when applying for a private mortgage, review the lender carefully. Visio Lending is one of the largest, most reputable lenders in the US. Our closing time is also as short as weeks, not months. Finally, we are transparent about our rates, so you will not have any surprises.
Agree on the Terms
As private money lenders are more flexible, you can negotiate the terms such as the length of your loan, interest rates, and down payment. However, each of these factors affects the others, so make sure you understand how changing any of them will influence the affordability of your loan.
Consult a Real Estate Expert
It's generally important to work with a real estate attorney for any real estate transaction — but this is especially true for private mortgages, as you need to ensure the stipulations match your needs.
Assemble Your Paperwork
While a traditional lender requires extensive documentation and insight into your personal finances, private money lenders such as Visio require only the essentials. Visio Lending requires the following:
Even if you’re borrowing from a friend or family member, ensure you have the right documentation, such as a promissory note and a mortgage deed that entitles the lender to take the property that secures the loan in case the borrower defaults or passes away. Also, you’ll need to register the loan and deed with the IRS and local authorities.
Apply for a Loan
Once you're ready to seek financing, you can start the application process.
Why Choose Visio Lending for Your Private Mortgage
Direct, Private Money for Rental Properties
Visio Lending has originated over $2.8 billion in private mortgages for rental properties, more than anyone else in the United States. Our leading loan products, proven process, and substantial experience simply cannot be matched. Let’s take a deeper dive into what makes us a superior private mortgage choice for investors: