Person-to-Person Loans…Creative Approach
Categories: Mortgage News, Real Estate News
hiI read an interesting article June 15th in the Real Estate section of Sunday’s New York Times regarding homeowners who are having trouble borrowing against their houses. Written by Bob Tedeschi, the article explains the benefits of the Online networks that have emerged in recent years allowing people to find loans or to make them, the same way they might exchange music or bid on collectibles.
The sites that are leading the trend - Prosper.com and Zopa.com say they have 
noticed a spike in activity since traditional lenders began restricting second mortgages and home equity lines of credit. Prosper’s users register with the site, permit the company to pull their credit data, and then post a loan request along with an upper limit for the amount of interest they are willing to pay. Roughly 50% of the prospective borrowers with excellent credit get financing, with the percentage declining for borrowers with credit scores below 720.
The entire article is well worth your time to read.
Dear Deni :
Great Article …
In a private mortgage, emphasis is on the value of the security, not the applicant’s proof of ability to pay. This makes it appealing to people who feel they can afford repayments but cannot prove serviceability. For example, the tax returns of many businessmen may bear little or no resemblance to their real income and/or their ability to service a loan.
However, not all institutional lenders will allow a second private mortgage behind their first mortgage and furthemore when it comes to Interest Rates please be aware that private mortgages are not regulated and you could become a victim of predatory lending practices
The news might have you thinking that no one of your buyers can get a loan these days. This is far from true. Hindsight has given us a clear picture of the kinds of loans that shouldn’t be offered again. But the loans that have performed more consistently such as Fixed 30 Years and FHA loans are still abundantly available, and you might be surprised what your buyers can qualify for.
Banks like to see strength in at least 2 of the 4 areas:
Credit Score ( Not necessary for an FHA loan )
Sufficient verifiable income for the payment amount
Equity in the property or down payment ( Only 3% for FHA )
Liquid assets (money in the bank, stock market, IRA’s, 401k’s, etc…)
The items that will make your loan more difficult to obtain:
Non-Owner Occupied (investment property)
Stated or No Income (meaning you can’t prove it with W2’s or Tax Returns)
Bottom Line: If your buyer can legitimately afford to make a regular house payment, there’s a very high chance that this can be proven to a lender, who will in turn be happy to give your buyers an excellent loan.
For more information you can visit my web site : http://www.BuyandClose.com