Things to Consider When Getting a Private Mortgage
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Posted On :
Feb-06-2012
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Article Word Count :
525
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Private mortgages can be just the thing for many homebuyers, who otherwise wouldn’t be able to obtain a mortgage through conventional methods, such as going to a major lender. With a private mortgage, a private individual or organization provides the money for the loan; these lenders aren’t necessarily affiliated with the mortgage industry, and they may not even always offer these types of loans.
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Private mortgages can be just the thing for many homebuyers, who otherwise wouldn’t be able to obtain a mortgage through conventional methods, such as going to a major lender. With a private mortgage, a private individual or organization provides the money for the loan; these lenders aren’t necessarily affiliated with the mortgage industry, and they may not even always offer these types of loans.
Private mortgages are often the only answer for homebuyers who have bad credit or too small of a down payment. However, just like with any other mortgage, there are certain things to take into consideration.
Just like with any other mortgage, you need to make sure that a proper loan document is provided and that it fully outlines the terms such as the rate you’ll be paying, the length of the loan, and the terms. Each of these has their own considerations, but you’ll want to make sure that they’re all outlined in a mortgage contract.
Just because you’re dealing with a private lender doesn’t mean that the agreement is casual in any way, and you need an actual and official loan document detailing every aspect of the loan.
One of the first things you need to look at in that documents are the terms of the mortgage. Private mortgages generally come with shorter terms, because the private lender is not in the business of loaning money. You don’t only need to be aware of a shorter term, you also need to know if you can afford that term or not. If you don’t think you’ll be able to pay the mortgage off within those terms, you need to ask the private lender if you’ll be able to refinance at that time. If not, that private mortgage option isn’t the best one for you.
The interest rate is something you need to look at with any mortgage you apply for, but it’s important that you know going into a private mortgage that the interest rate is likely going to be higher than what you’d pay on a traditional mortgage. Because private lenders are usually taking on more risk, they charge a higher rate for that risk.
One thing that many people don’t realize about private mortgages is that while they can go into default that default can come with more than just a missed payment. While missing a mortgage payment is an obvious form of default, some private mortgage lenders also consider default as being other things such as making unauthorized renovations to the home, or a late payment on taxes or property insurance. It’s extremely important that you know what your private mortgage lender considers default, so you can make sure that you don’t fall into it.
Private mortgages can be the answer for many homebuyers who think there isn’t one. However, it’s important that you know the most important things to consider when applying for one, and that you always have a lawyer check over your private mortgage contract. Just because the mortgage is private doesn’t mean that you can’t have someone look it over.
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Article Source :
http://www.articleseen.com/Article_Things to Consider When Getting a Private Mortgage_144842.aspx
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Author Resource :
Bryan J is the author of this article. For more information about Private Mortgage and Private Mortgage Lenders and please visit canadianmortgagesinc.ca.
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Keywords :
Private Mortgage, Private Mortgage Lenders,
Category :
Finance
:
Mortgage
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