The United States is known as the “Land of Opportunity.” One thing is for certain, there are plenty of lenders and other financial institutions in the United States that look for opportunities to loan money to qualified borrowers. However, with so many different types of loans, it’s critical to know what you’re getting yourself into before you go loan shopping.
One of the lesser-known types of loans is private money loans. Private loans are governed by different sets of principles and norms than conventional loans, but they’re advantageous to certain types of borrowers. Continue reading to learn more about private money loans and how best to use them.
1. Investment Property
If you’re a homeowner, you know that the home loan process is arduous. Who would want to go through it more than once? Actually, the answer to that is a lot of people, but real estate investors tend to favor private money loans over conventional loans.
One of the things that make private money loans a good idea for real estate investors is that private loans have much shorter loan terms than mortgage loans. Most private money lenders only offer loan terms of 1-3 years. Private money lenders also offer a much quicker underwriting process—you can get the funds from a private loan in as little as a week, whereas with a conventional loan, the underwriting process could take up to three months.
2. Home Improvements
One of the things that draw borrowers to private money loans is that private lending institutions like Pacific Private Money don’t use your credit score as a metric of your trustworthiness. Rather than your credit, Pacific Private Money and similar institutions use your home equity or real estate holdings to gauge your ability to repay them.
Whether you’re a real estate investor or homeowner, you’re likely familiar with how much home improvement companies charge for renovations. However, home improvements are as much a part of being a homeowner as making monthly mortgage payments.
If you’re working on an investment property that you’re planning to sell soon, a private money loan is a great option. However, you need to do your research on the home improvement companies in your area to ensure you get the best contractor you can afford.
MLM Home Improvement Company has years of experience with home improvements from roofing to window installation. They’re one of the most respected home improvement companies in the DC Metro Area. Before you get a loan for home improvements, you should get an estimate from MLM to get an idea of how much your home improvements will cost. You should always know exactly how much money you’re going to need before trying to get a loan.
3. Business Investment
One of the best ways to use a private money loan is to invest in your small business or someone else’s burgeoning business. Private loan institutions are more concerned with your ability to repay your loan rather than your history of repaying loans. If you intend to invest capital into a business that’s burgeoning or showing great promise, you can probably find a private institution or individual to offer you a private loan.
Autonomous vehicles are one of the most exciting investment opportunities there are. Companies like Uber, Google, and Amazon are already using autonomous vehicles in Nevada, Arizona, San Francisco, and Mountain View, California, and they’ll soon be in New York City. Autonomous vehicles show signs of being safer than human drivers, which means switching to driverless vehicle technology could mitigate human error and reduce car accidents. To see safety statistics related to self-driving cars in 2019, visit the Future Insights website.
Autonomous vehicles (AVs) aren’t yet mainstream forms of transportation, so now is the time to invest. Tesla, General Motors, and BMW already have fully electric vehicles, and now they’re making their forays into autonomous vehicle manufacturing as well. If you strike now while the iron is lukewarm, you could reap huge rewards once it gets hot!
4. Dodge Foreclosure
If your home goes into foreclosure, keeping it becomes an uphill climb. If you don’t have the money to get out of foreclosure, a private loan can be like a life raft. The quick underwriting process and the fact that your home is your credit make private loans a prime option for keeping your home if you’re at risk of foreclosure.
Whenever you get a home loan, you have to have something to offer as collateral in case you can’t repay your loan, so do your due diligence before taking out a private loan. However, if you’re an investor with prospects for recovering more than the loan amount, private loans are an ideal financial instrument.
