By Donald Sanders There are people who think that after getting a few deals and mortgages in their name, they will never ever have any tro...
There are people who think that after getting a few deals and mortgages in their name, they will never ever have any trouble getting financing. That is not always the case though. Once one has several mortgages listed on their credit report, they will find it hard if not impossible to get any additional funding. This is where private lending comes in handy. When considering private lenders for real estate Seattle residents should know what it involves.
Using private money which is cash loaned out by private persons never gets recorded in the credit report. There are different criteria that a lender can use to make the decision about whether they should give a loan. Most of their clients are regular individuals. The lender does not submit any report to the credit bureau and therefore these loans do not show up in their reports.
What this implies is that such loans have no impact on credit of an individual. They do not count against borrowing potential of an individual or even their debt-to-income ration. As such, should you want ti borrow money for other ventures, the lender will not see any such loans or mortgages in your report. Your credit report will be approved.
The building of a network of lenders for purposes of real estate investment means you will never have to explain to creditors the reason why you have many mortgages or loans. You are not required to prove your income is enough to cover the loans since nobody will know about them in the first place. The agreement is between the individual and the lender. Actually, unless one wants to, even the lending entities do not need to know each other.
The fact that borrowing is easy and fast comes with some cost implications. The lender will impose high rates of interest to cater for the high risk. Their justification for the high rates is that money they use for lending comes from individuals or entities. This is different from public lending which can get funds from the state. State funds come with less risk, hence lower interest rates.
Private lending is always equity based. This basically means its collateral is only the assigning of property on which the loan is based. The property can even cost less than proceeds of the loan. In most cases there will be not any form of security but currently there are those that secure the loans. Irrespective of the high risks involved, equity based lending is based more on how clear the deal is and not really capacity or collateral offered by a borrower.
An advantage of this mode of lending is that the loan repayments still get to be made to a servicing company. The lenders are insured and fully licensed to offer their services. This means monthly payments get to be made through a recognized institution and never to individuals.
The debt service coverage is not that strict. Because the companies have no underwriting process which traditional service providers have means they are very flexible. There are various other factors used in determining suitability of clients to the loans.
Using private money which is cash loaned out by private persons never gets recorded in the credit report. There are different criteria that a lender can use to make the decision about whether they should give a loan. Most of their clients are regular individuals. The lender does not submit any report to the credit bureau and therefore these loans do not show up in their reports.
What this implies is that such loans have no impact on credit of an individual. They do not count against borrowing potential of an individual or even their debt-to-income ration. As such, should you want ti borrow money for other ventures, the lender will not see any such loans or mortgages in your report. Your credit report will be approved.
The building of a network of lenders for purposes of real estate investment means you will never have to explain to creditors the reason why you have many mortgages or loans. You are not required to prove your income is enough to cover the loans since nobody will know about them in the first place. The agreement is between the individual and the lender. Actually, unless one wants to, even the lending entities do not need to know each other.
The fact that borrowing is easy and fast comes with some cost implications. The lender will impose high rates of interest to cater for the high risk. Their justification for the high rates is that money they use for lending comes from individuals or entities. This is different from public lending which can get funds from the state. State funds come with less risk, hence lower interest rates.
Private lending is always equity based. This basically means its collateral is only the assigning of property on which the loan is based. The property can even cost less than proceeds of the loan. In most cases there will be not any form of security but currently there are those that secure the loans. Irrespective of the high risks involved, equity based lending is based more on how clear the deal is and not really capacity or collateral offered by a borrower.
An advantage of this mode of lending is that the loan repayments still get to be made to a servicing company. The lenders are insured and fully licensed to offer their services. This means monthly payments get to be made through a recognized institution and never to individuals.
The debt service coverage is not that strict. Because the companies have no underwriting process which traditional service providers have means they are very flexible. There are various other factors used in determining suitability of clients to the loans.
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Get a list of the things to keep in mind when picking a loan provider and more information about reliable private lenders for real estate Seattle investments at http://privatecapitalnw.com now.
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