Southland Atlanta Custom Builders Share the Pros and Cons of Private Mortgage Loans

MARIETTA, Ga. - Oct. 16, 2013 - PRLog -- Since the crash of the real estate market, getting approved for a home mortgage has been anything but easy. In today's lending market, having just a few minor blemishes on your credit report is often enough for most traditional lenders to deny financing. As a result, those in the market for a new home have resorted to an alternative form of home financing – private mortgage loans. But, are these loans the solution? Here, Southland Atlanta custom builders share the pros and cons of private mortgage loans.

What are Private Mortgage Loans?

Private mortgage loans, which are also known as "hard money loans," are issued by private investors or private lending organizations to a home buyer for use towards purchasing a specific property. Private investors who are interested in making real estate investments are usually members of the regional real estate investment club so this is the best starting point for homeowners looking to meet these professionals.

The Pros of Private Mortgage Loans

One of the most popular selling points of private mortgage loans is that they are often easier to get approved for than traditional loans. This is because the loan is being approved more on the property's profit potential than the applicant's credit rating or annual income. As a result, this type of loan is an excellent option for self-employed individuals who can often have problems providing proof of steady income and others who may have less-than-perfect credit.

Mortgage loans granted through private lenders tend to have significantly shorter payback periods, so these types of loans are great options for a real estate investor looking to purchase an inexpensive property for renovation and reselling purposes. Plus, private mortgage loans offer the benefit of a much shorter approval time. Where traditional mortgages can take as long as 45 days for a lending decision, a mortgage loan from a private lender can be approved in just a few short weeks.

The Cons of Private Mortgage Loans

As stated earlier, these types of loans have significantly shorter payback periods. While traditional bank mortgages give borrowers up to 30 and in some cases even 50 years to repay the loan, private mortgage loans are usually expected to be paid in full within six to twelve months. In some cases, the lender will extend the terms to two years, but rarely is it longer than that.

Private mortgage loans also carry much higher interest rates than bank-approved loans. In fact, these loans can have interest rates up to double of the average 30-year mortgage.

There's no mistaking that private mortgage loans offer homebuyers with less than perfect credit a chance of getting in on the American Dream. However, before considering this option, a home buyer has to understand the terms of their agreement and truly weigh the pros and cons. For some, this option may be a dream come true, but for others, the high interest rate and short payback period may not make sense financially.

For more information about Southland Atlanta custom builders or to start designing your custom dream home with Southland's team of professional home designers, contact Southland Custom Homes today by calling 1-866-56-BUILD or visit their website at www.southlandcustomhomes.com .

About Southland Custom Homes
Southland Custom Homes is one of the top-rated Atlanta custom builders. Since 1980, Southland has helped thousands of people build high quality new homes in metro Atlanta, Macon, and North and South Georgia, while staying true to its mission of building quality, affordable custom homes on the land their customers love. With model centers located in Marietta, Stone Mountain, Dawsonville, Metro Atlanta and Macon, the Southland Custom Homes team is your best choice for a Georgia new home builder.

Southland designs high-quality custom built homes that will fit the lifestyle and budget of anyone’s needs. Southland’s customers may choose from over 120 beautiful custom home plans, each one customized to suit individual needs. Additionally, customers who have their own house plan can get a free estimate to build from Southland within 48 hours. Southland will also design and build a new home “from scratch” for those individuals who want all of their ideas incorporated in their perfect dream home. Best of all, these custom design services are free to all Southland customers!