Friday, May 12, 2017

Private Lenders For Real Estate Seattle

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 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 that is provided by individuals or entities does not get recorded in the credit report. There are various criteria used in decision making of whether the loans should be given or not. Most clients for these loans are regular people. The lender never submits a report to the credit bureau and therefore the loan is not reflected in the credit report.

What it will basically mean is that the loans do not have any impact on credit of the individual. They will not count against the borrowing potential of the person, or their debt-to-income ratio. Therefore, if you should need to borrow money for other investments, or for other purposes, the lender does not see a long list of mortgages on the credit report. They will approve your credit report.

Building a network of lending companies for the purpose of real estate investment will mean you are not to explain to a creditor the reason for your many loans or mortgages. There is no requirement that you have to give proof of your income and whether it is sufficient to service the loan. Nobody knows about those loans even. The borrower and lender are the ones involved. Even two lending entities do not share the information unless a client wants.

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 equity based. This is to mean that the collateral is solely the assignment of property to which that private loan is applied. It could cost less than proceeds of the loan. The private loaning is never secured though there are those involved in some kind of security. The equity based lending, the high risk notwithstanding, tends to pay more attention to clarity of the deal as opposed to capacity, character or collateral of the 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 very strict. Since the forms never have any underwriting process means they are flexible. This is unlike the traditional lending options that have underwriting processes. The private entities use other features to determine client suitability.

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