Private mortgages for pre-sale purchase
January 29, 2021 | Posted by: Alex Vinarski
Private mortgages for pre-sale purchase.
Many buyers who bought pre-sale 2-3 years ago having difficulties to get a mortgage from the bank upon completion of the property. With all the changes in mortgage policies and rate increase, it’s very hard to qualify for the mortgage. One of the options is to use private lenders.
I have private lenders that will use current market value of the property, not the purchase price. Private lenders don't need to see any income verification, and they can lend very fast.
Buyers usually put 20% down payment on new construction. With market value significantly increase in past 2-3 years, buyers should have at least 35% equity in the property. They don’t need to come up with more money for completion. Rates are around 5-7%%, plus 2% fee. This is more like short term solution. Nobody wants to pay 7% for 25 years. Buyers can sell the property later, and they don’t need to pay penalty as mortgage is open. Another option is to refinance with A or B lender after 1 year, using market value.
Please contact me if you have any question about this option.