Wednesday, June 13, 2018
How Do Private Mortgage Lenders Compare to Conventional Lenders?
dward James Stock, Jr., holds more than two decades of experience in the real estate lending industry. A member of the American Association of Private Lenders, Edward J. Stock has served as the managing partner of Insula Capital Group since 2016.
Insula Capital Group, based in New York, is known for its lighting-fast loan turnaround times. While the firm focuses most heavily on fix and flip real estate projects, it also offers long-term financing solutions.
As a private money lender, Insula differs from conventional lenders in several ways. One important distinction is that private lenders do not sell their loans on the secondary market, whereas conventional lenders underwrite their loans based on third-party requirements in order to do so. Most often, conventional loans are underwritten according to Fannie Mae or Freddie Mac guidelines.
Private lenders also typically offer shorter loan lengths than conventional loans, and focus more heavily on the profitability of the real estate project itself, than on the borrower. Private lenders often have higher interest rates on loans, since borrowers with less-than-ideal credit are able to qualify. However, borrowers who tap into private lending sources typically enjoy a faster loan approval process, as opposed to long, drawn-out approvals common with conventional financing.