There are Many Types of Loans As a Property Owner or Buyer you want alternatives to the big bank loan process, which usually takes a long time to fund and requires excessive paperwork- IF THE LOAN FUNDS. The Borrower has many options available to them today and below are are a few of those options.
Private Money Purchase and Portfolio Loans Private money refers to financing issued by Private Investor(s) or Small Investment Group(s). Typically these loans are short term, usually 1- 5 years. These loans fund faster and require much less paperwork than the standard loan from Big Banks.
Private Money Refinance and Portfolio Loans A Private Money Rate n Term or Cash-Out refinance Is common practice. A borrower will refinance their mortgage using a Private money loan and they will increase the principle amount in order to take some cash out of the deal. If this is done as a Private money Refi, the borrower will need to put up Real Estate as collateral. Usually, people will do this when they want to make repairs or updates to the property and need some cash to do it. However, If done through "Big Bank", the borrower will be burdened with a heavy load of requirements for a refinance loan.
Bridge Loans This type of financing helps people who are working to sell one property while they also purchase another. A bridge loan can help cover the cost of down payment and other immediate needs and it is usually paid in full when the first property is sold. This kind of program makes it possible to purchase the second property without having to build in a "contingency clause" meaning that second purchase is not going to have to wait until the first property has sold. When people are relocating or have to move quickly, bridge loans can be a big help.
New Construction Loans A Construction Loan is generally short term, less than one year and are intended to help bridge the time gap needed to build a new home. Once the home is completed the loan will be converted into a standard financing or possibly a Private money loan if that is what the buyer decides to pursue. This can be an advantage to other standard loans, because buyers who need special financing because they fell outside of the typical funding parameter, this kind of arrangement works well. And builders like it because they know they have a qualified buyer.