Private Lending

Private lending consists of individuals providing funding to borrowers, with loans being secured by a deed of trust that is recorded against the property of a borrower. Essentially, private lending is dependent on direct lending versus deeds of trust that are compelled by basic collateral value.

Private lending is also called self-directed lending, non-traditional lending and peer-to-peer lending.

A de-facto safety net of protective equity is provided when agreements are diligently underwritten with moderate loan-to-value ratios, which can offer great assistance in the case of a borrower defaulting on their loan. 

Borrowers who do not fulfill more traditional lending requirements due to bad credit, employment-status issues and citizenship problems find this niche favorable. 

Private lenders award funding for borrowers to buy commercial, residential or rental estate properties, as well as the supplementing of finances for down payments and renovation costs. Lenders are also alleviated from frequent involvement with construction, management and rehabilitation of properties.

Borrowers typically enjoy the asset-based security that is a result of working with a private lender, plus the returns they receive are usually superior to the returns given by more traditional loans. The speedy and simplified funding process provided by private lending is also highly attractive to its participants. 

Private lending is great for investors because it eradicates intermediates such as banks, finance companies, investment managers and credit unions. Lenders obtain the maximum proceeds from their property-collateralized investments sans forfeiting large allotments of their returns to various institutions, therefore investors receive greater risk-and-return results. 

Private lenders become secure by the mortgage note on the home, as it is fundamentally the centerpiece of the deal. Collateral is certainly emphasized in this non-traditional lending, which possesses a protocol that incorporates the protection of a lender’s interests. 

A standard private lending transaction typically includes a promissory note, mortgage, deed in lieu of foreclosure, title insurance and hazard insurance. 

Funding sources utilized by private lenders normally are low-interest lines of credit, savings and individual retirement accounts. These loans fail to have a standard term or length, but 12-18 months is usually the average. The length of a loan from a private lender, however, is influenced by a combination of market conditions, complexity, planned exit strategies and scope.

Not only is there no standard term, there also is no definitive loan amount. Totals vastly differ, plus they largely depend on the scale of the property or offered project. 

With our sizable pool of investors, lenders and even banks, Associates Home Loan of Florida surely can guide you through the private lending process! Call us today at (866) 257-9476.