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Private Money Is Not As Bad As You Think!

Mike Chissell, Trusted Mortgage Advisor • Nov 09, 2022

 It’s not the money-grubbing lenders who are ripping people off to where the borrowers can’t repay their loans back. The Dodd-Frank act passed in 2010 weeded out all the morally dubious lenders. And depending on the client it can be their best option depending on their circumstances. Here’s a quick story about how we were able to get a client approved only with a private money lender and were able to make their financial goals happen.


We had a client come to us with a unique scenario. She had a 2-year land contract on the property that was 3 weeks away from being completed. A land contract is an alternate way of financing a property. In a standard land contract, the seller will keep the legal title to the property until the property is paid off while the buyer gets equitable title, which enables them to build up equity in the property. So, the only way she could keep the property and her $150,000 of built-up equity would be to close in the next 3 weeks and do a private money transaction. But it was about to expire in 3 weeks, and she tried to get a loan twice with two other lenders and got denied, before coming to us.


The reason she was denied was because of her low credit score, being a self-employed business owner and it being a Non-QM mortgage. Non-QM mortgages are not the standard loans like conventional, FHA or VA loans. No matter what we did to get her into the best loan program possible, it didn’t work out. So the only way for her to keep the property and close in the next 3 weeks would be to do a private money transaction. There are private lenders who are individuals who source their own money for purchases or refinances of homes. So going through a private money lender, we were able to get her approved in a week, and she was able to close before her 3-week deadline. Now, the main downside of going private money lending is that the rates and fees will be higher than standard loans.


If you want to learn more about private money lending or any kind of lending, give us a call at 727-376-6900 or go to our website at  https://www.chissellmg.com/Contact/Mortgage-Pre-approval-Form-Trinity-Florida


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