What is a Private Lender Mortgage?

A private lender mortgage is a type of home loan that is provided by a private individual or company rather than a traditional lender such as a bank or credit union. Private lender mortgages are also known as “hard money loans” or “bridge loans”.

Private lender mortgages are typically used as a short-term financing solution for real estate investments, such as fix-and-flips or rental properties. They can also be used for borrowers who may not qualify for traditional mortgages due to credit or income issues.

Private lender mortgages have a few key characteristics that set them apart from traditional mortgages:

  • Higher interest rates: Private lender mortgages typically have higher interest rates than traditional mortgages, as the lender is taking on more risk by lending to a borrower who may not qualify for a traditional loan.
  • Shorter terms: Private lender mortgages have shorter terms than traditional mortgages, usually ranging from 6 months to 2 years.
  • Larger down payments: Private lender mortgages often require larger down payments than traditional mortgages, usually 20% or more.
  • Asset-based lending: Private lender mortgages are typically based on the value of the property being financed, rather than the borrower’s credit or income.

It’s important to note that private lender mortgages can be an expensive option and may not be suitable for all borrowers. It’s important to thoroughly research the terms and conditions of any loan before committing to it.

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