Private Mortgages are the Secret Buying Weapon

The driven portions of millennials who want to own a home have that as a life goal. The National Association of Realtors took a study this year and found that roughly 35% of the home buying market is millennials, and most of them desire to own their own home(s) one day.

We all know buying a home is no simple task, especially for the first-timers. Today’s new buyers are facing a ton of student debt, massive credit card bills, and a shortage of homes making the price skyrocket to ridiculous numbers. It can be done, but it’s not easy. The only thing home buyers have on their side at the moment is historically low interest rates. One way around the arduous process is to find yourself a private mortgage note.

What is a private mortgage note?

Private notes are the other option outside of a traditional mortgage. It’s a private lender supplying money to buy a piece of property. The cool thing is, there is no bank!

The mortgage note is a legally binding document detailing the parameters of the mortgage. It’ll include the pu8rchase price, the repayment schedule, and interest rate. When the bank gives a mortgage note, they hold on to the note and collect the monthly payments. When it’s a private note, the lender receives the monthly payments while holding on to the note.

Typically, it is only homeowners who have paid their mortgage off in full and have a large pile of cash who can offer buyers private loans. If the private lender chooses, they may sell their note to another person or company. As the buyer you are entitled to interact with either group. The advantage of private notes against a traditional note is the private note won’t have as many requirements and restrictions.

Millennials & Private Notes

A millennials secret weapon in today’s housing market is a private note. Most banks are not approving notes for millennials or Gen Y-ers because they fail to meet the qualifications; which happened to become drastically sharper after the 2000’s recession.

The most common qualifications they fail to meet are: good credit scores, high down payments, passing a home inspection, and a consistent two year job history.

Some more cool aspects of private mortgages are you can usually buy the home faster, fewer qualifications, and the buyer has better negotiation standing regarding interest rates.

When a potential buyer has a private note lined up, it all comes down to the quality of their real estate agent. They should know which properties accept private mortgages and which don’t. When the time comes to start negotiating, they can help you significantly. 

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