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Private Lender Loans vs. Conventional Loans

What is a Private Lender Loan?

Are you a real estate investor looking for financing options? Private lender loans and conventional loans are two common choices. These types of financing loans, also known as hard money loans, are provided by private individuals. Or, they are companies that typically have faster approval times and more flexible terms than traditional loans.

Private Lender Loans

Pros of Private Lender Loans

  1. Quick Approval: Private loans typically have much faster approval times than traditional loans, often only taking a few days.
  2.  Flexible Terms: They often have more flexible terms than traditional loans. Terms include interest rates, repayment periods, and collateral requirements.
  3.  No Credit Score Requirement: This type of loan is asset-based, meaning that the lender is more concerned with the property value than the borrower’s credit score.

Cons of Private Financing Loans

  1. High-Interest Rates: Private lender loans typically come with higher interest rates than traditional loans, ranging from 10% to 15%.
  2.  Short Repayment Periods: Private lender loans often have much shorter repayment periods than traditional loans. They range from a few months to a few years.
  3.  High-Risk: Private lender loans are often considered high-risk loans. Consequently, they involve real estate investors looking for quick funding to purchase properties with unknown issues or in distressed neighborhoods.

Conventional Loans

On the other hand, conventional loans are by banks or mortgage lenders and may have higher credit score requirements and stricter terms. In this blog post, we will compare private lender loans and conventional loans to help you decide which option is best for your real estate investment needs.

Pros of Conventional Loans

  1. No Mortgage Insurance: Conventional loans do not require mortgage insurance if you put down 20% or more, potentially saving you money on your monthly payments.
  2.  Higher Loan Limits: Conventional loans have higher limits than FHA loans, which may allow you to purchase a more expensive home.
  3.  More Property Options: Conventional loans have fewer property requirements than FHA loans, meaning you may have more options when purchasing a home.

Cons of Conventional Loans

  1. Higher Credit Score Requirements: Conventional loans typically have higher credit score requirements than FHA loans, making them less accessible to borrowers with lower credit scores.
  2. Higher Down Payment: Conventional loans typically require a down payment of at least 5%, making
  3.  Stricter requirements: Borrowers may need a higher credit score and a lower debt-to-income ratio. Also, a larger down payment to qualify for a conventional loan. As such, they can make it more difficult for some borrowers to obtain financing for their home purchase.

Private Financing with North Eastern Private Lenders

Private lender loans are an excellent option for real estate investors who need quick financing for non-owner-occupied properties. In particular, they can be a great fit for investors looking to finance apartment rentals, new construction projects, and house flips.

Apartment Rentals

Private lender loans can provide real estate investors with the capital they need to purchase and renovate apartment buildings for rental purposes. With the flexibility of lender loans, investors can often secure financing quickly and with fewer restrictions than traditional bank loans, allowing them to move forward with their investment plans more rapidly.

New Construction

Private lender loans can also be an excellent financing option for investors looking to build new construction projects. Whether a single-family home, multi-family building, or commercial property, private lender loans can provide the necessary funding to start construction and see the project through to completion.

House Flips

With the ability to secure financing quickly and with fewer restrictions than traditional loans, investors can start purchasing and renovating properties to flip for profit. Private lender loans allow investors to take advantage of opportunities in the real estate market quickly and capitalize on their investment strategies.

Private or Conventional: Which is Right for You?

Although private lender loans for non-owner occupied properties come with higher interest rates and shorter repayment periods, they offer many benefits to real estate investors. The flexibility and quick access to capital can allow investors to seize opportunities and grow their real estate portfolios. Private lender loans may be the right choice for financing apartment rentals, new construction projects, or house flips.

Contact us today!

At North Eastern Private Lenders, LLC, we understand the unique needs of real estate investors. Therefore, we are committed to providing flexible and competitive financing options. Furthermore, we offer non-owner-occupied loans for apartment rentals, new construction projects, and house flips. All with competitive rates and points. Our loans require no appraisal fees. Also, no credit checks, no up-front fees, and no rehab draw fees. So, for quick access to financing for your real estate investment, contact us today to discuss your options. Our experienced team is here to help you find the right loan to fit your needs. We care about your financial success!

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