When most homeowners seek a mortgage, they go to a bank, credit union, or other financial institution, but sometimes, these lenders won’t lend them money for a variety of reasons. When looking for a mortgage broker Barrie homeowners who are having a hard time getting approved for a loan may want to consider a private mortgage lender. Here’s why.
Easier to Qualify
If your finances aren’t in tip-top shape, a traditional lender may not want to lend you money. Ever since the financial crisis of 2008, lenders are reluctant to take risks on people with less-than-stellar credit or who have high debt-to-income ratios. Private mortgage lenders, though, have more wiggle room when it comes to lending money. For instance, a freelancer may not have the W2 forms that most traditional lenders require to prove income, which sinks their opportunity to own a home. A private lender can be more lenient with proof of income.
Since the qualification process with a private mortgage lender is usually more streamlined, you can typically get funded for a loan more quickly. This means you can close on your house more quickly as well. In many cases, you can get the money you need from a private mortgage lender within days as opposed to the weeks it can take a bank to release the funds. This faster process also benefits the seller because they’ll get their money more quickly as well.
Traditional lenders have to follow a very specific set of steps before they can lend you money, but private lenders set their own rules, so they can determine what they need to see before they will release your funds. This is one reason why the private mortgage industry is growing so quickly. With the more flexible ways of making a living these days, it’s become necessary for more flexible lenders to fill the gaps where traditional lenders are failing. If you have a non-traditional job, you may find the flexibility of a private lender extremely helpful.
With a private mortgage lender, you might be able to get a lower interest rate than the one you could get through a traditional lender. This is because the private lender only needs to have an interest rate that’s higher than they could get by keeping the money in a bank or investment account. This arrangement benefits both you as a borrower and them as a lender. You get a lower interest rate on what you owe, and they get a higher interest rate than they would get by leaving the money alone. Of course, they are taking a risk by lending you money, so they may tack on a bit extra interest for that risk, but it still should be lower than what you’d get from a traditional lender. Just be sure to consult a tax specialist before closing the loan to make sure the rate isn’t too low that it could lead to tax problems.
Getting a mortgage can be a complex process, especially if you have to jump through all the hoops of a traditional lender. Fortunately, you have an alternative in private mortgage lenders, who can help you get a loan with excellent terms that you can live with.