If you have less than perfect credit, it may be difficult to secure a mortgage through a major financial institution such as a bank or credit union. However, private lenders may be able to assist you with achieving your dreams of homeownership.
Selecting a Private Lender
Be sure to verify the reputability of the lender you are considering through your state's mortgage broker licensing board before selecting a loan that best suits your needs.
Online Database
The following entities offer online resources to assist borrowers with locating private lenders:
- The American Association of Private Lenders, which represents organizations nationwide that specialize in peer-to-peer and private real estate lending, provides a lender directory on their website.
Private Lending Companies
Select private lenders offer financing options to those individuals who have special circumstances that would likely automatically disqualify them with traditional lenders. Not many of these lenders work on a national level; most offer private loans within one or two particular states.
Below are two private lenders offering loans on a broader scale.
Loan Leaders of America
This company specializes in assisting non-traditional borrowers with home purchases. Those with past credit issues and people who are unemployed are target customers. In most instances, a lower loan- to-value product that is accompanied by a higher interest rate is offered, but timely payments can serve as a credit booster and possibly qualify you for refinancing in the future.
To learn more or apply for a loan with this company:
Patriot Lending Services, Inc.
Patriot Lending Services enables those with poor credit to possibly obtain financing through their "Imperfect Credit Program." In most instances, the interest rates are steeper than average and you may not be eligible for a fixed mortgage. Also, a penalty usually applies if the entire outstanding balance of the loan is paid off early. However, it is possible to strengthen your credit file if you adhere to the payment terms and conditions each month.
To learn more or apply for a Patriot Lending Services Loan:
Important Considerations
Since private home loan products usually come with higher interest rates as a result of credit risk, you should only consider these mortgages for a brief period of time. Once a few years have passed, seek more attractive financing elsewhere. Do keep in mind that a prepayment penalty might apply for these types of loans, so an additional fee may apply when refinancing into a mortgage with better terms.
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