1. Private Mortgage Investor: Private Mortgage Investing, also known as Private Mortgage Lending is one of the best ways to invest your money secured by a real estate mortgage.
2. Mortgage Borrower: Sometimes when you need to borrower money, the best source for that money is a private mortgage investor, also known as a private mortgage lender.
3. Mortgage Broker: The professional mortgage broker connects the private mortgage investor and mortgage borrower enabling a smooth transaction to benefit both parties.
4. Private Mortgages Network: Provides business and educational resources. Our Home Page will periodically feature an educational article written by a professional in the industry, so check back often. If you would like to contribute an article please contact us at our email address: editor@privatemortgagesnetwork.com
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Our Home Page will periodically provide educational articles about private mortgage investing and borrowing. So check back often for new information. If you are a professional involved with the mortgage industry and would like to be one of our contributing authors please contact us by email.
Read our current featured article below. |
Does A Private Mortgage Investor Need A Professional Mortgage Broker To Make Mortgage Loans? Copyright © 2007 By Paul Wells, M.S.
Paul Wells is President of Success Mortgage. This article is adapted from his book,
The Secrets Of Private Mortgage Lending.
The key for an investor in the private mortgage lending industry is an experienced licensed mortgage broker with a good reputation. I do not mean just any licensed mortgage broker. Find a very experienced broker that has a good ethical reputation. Most states require the mortgage broker to be licensed. Under most state laws, private investors cannot hold themselves out to the public as a mortgage lender unless they become a licensed mortgage lender. Under these laws the private mortgage investor cannot advertise their mortgage services.
Therefore, the investor needs a network of contacts that bring the investor and the borrower together. The best legal way is with a Licensed Mortgage Broker in the state the investor wants to lend in. The investor simply makes contact with a reputable licensed mortgage broker who is familiar with private mortgage lending. The private mortgage investor tells the broker they would be interested in funding some of the broker’s mortgages that need private money.
However, this investor will not be the only private mortgage lender the broker works with. Consequently, building a trusting and friendly relationship with the mortgage broker can land the investor more mortgage deals than would otherwise be the case. Building a relationship with three or four Licensed Mortgage Brokers who are experienced in the private mortgage lending industry would be best for the private mortgage investor. All the brokers will be happy to present the investor with mortgage lending opportunities.
Most mortgage brokers are trying to help the borrower obtain a fair mortgage for their circumstances. When first starting out with a mortgage broker the private mortgage lender should be flexible about what rate to charge and the terms on any mortgage loan the broker presents. The private mortgage investor should listen to the broker and ask for their suggestions on what rate and terms to set to be fair to all parties. The broker understands that it is a private mortgage loan and the customer does not qualify for a bank loan. The broker usually understands the market for each deal. Going along with the broker’s suggestion about rate and terms may be a good idea early in the relationship between the broker and investor even if the investor wanted a little higher rate. Remember, the investor is in the relationship building stage. Later, when the private mortgage lender and the mortgage broker are more comfortable with each other, negotiating a higher rate of return for the lender will be much easier.
The mortgage broker usually has a half dozen or more private mortgage lenders he can broker a deal to. Each private mortgage lender has their favorite type of deal. The private lender should try to develop a comfortable lending niche. For example, if a particular private lender is the only private mortgage lender that consistently loans money on homes valued under $80,000.00, then it is likely the broker will start giving that investor the first exclusive look at funding those loans.
Moreover, occasionally having lunch together at a favorite restaurant can help build good relations between the broker and the investor. Lunch conversations can be about how the mortgage broker presents mortgage deals to his various private mortgage lenders or about what kind of mortgage deals the private lender is interested in funding and what kind of mortgage deals the broker would like to see funded. Conversations can also be about off topic subjects of common interest, such as sports, history or computers. Of course, building a business relationship with someone you personally like is much easier than with someone you think is a big jerk. The private mortgage lender should find a mortgage broker they respect professionally and get along with personally.
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Finding the right professional mortgage broker may be the answer to your goals. Why are mortgage brokers a great source for private mortgage investors and borrowers? Simply put, mortgage brokers are the professionals that connect borrowers to the appropriate money source for their needs. Professional and ethical mortgage brokers know how to make a good match.
There can be a number of combinations of professionals to make the transaction work for both the private mortgage investor and the borrower. An experienced mortgage broker should know what combinations of professionals is best for each transaction. The combinations can be made up of a title company, a surveryor, appraiser, attorney, inspector, contractor, county officials, a flood certification company, hazard insurance company. All of these entities will work with the professional mortgage broker for a smooth transaction that is right for the private mortgage investor and borrower. |
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