A private money mortgage for a primary residence is relatively uncommon, as private money loans are typically used for investment properties, fix-and-flips, or other real estate ventures. However, it is possible to obtain a private money mortgage for a primary residence under certain circumstances, particularly if you face challenges with traditional financing, need fast access to funds, or have unique circumstances that prevent you from qualifying for conventional loans
When Private Money Mortgages for Primary Residences Are Useful
- Credit Issues:
- If you have a low credit score or past financial difficulties (e.g., bankruptcy or foreclosure), you might not qualify for a traditional mortgage. Private lenders focus more on the collateral (the property) and less on your personal credit history.
- Self-Employed Borrowers:
- Self-employed individuals who have difficulty proving income through tax returns or W-2s might find private money mortgages a viable option, as private lenders are more flexible with income verification.
- Unique Properties:
- If the property you’re purchasing is unusual, such as a fixer-upper, a non-conforming property, or a property in a rural area, traditional lenders may not approve it. Private money lenders may be more willing to lend based on the property’s value rather than its characteristics.
- Time Sensitivity:
- If you need to purchase a home quickly (for example, in a competitive real estate market or to avoid foreclosure), private money loans can be processed much faster than conventional financing.
- Bridge Financing:
- Private money loans can be used as bridge loans if you need to buy a new home while awaiting the sale of your current property.
Advantages of Private Money Mortgages for Primary Residences
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