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