Private mortgage financing is just what it sounds like. This is obtaining financing generally through an individual investor or group of investors (mortgage investment company). Private financing is generally done on a temporary basis with the lender always wanting to have an “exit strategy”. Private financing is a short term solution to a short term problem. Generally because of the high rates and fees involved, private financing isn’t a long term solutions.
Some possible reasons to obtain private financing might include the following:
- Renovating a badly maintained property to a standard that would be lent on by “A” lenders
- Short term bridge financing
- Temporary financing while a property is sold
- Second mortgage financing to pay down other debt and improve credit scores
- Funds to pay off CRA or other creditors