Being a private mortgage lender offers the opportunity to earn higher yields by lending to the best borrowers in real estate.  Due to The Great Recession, lenders such as banks, credit unions, and mortgage brokers have tightened up standards.private mortgages  As a result, there is a tremendous opportunity to book huge returns from loaning only to the applicants with superb backgrounds in real estate investing.

 One blowback from The Great Recession is that some lenders will not issue a mortgage to a party if they have more than a certain number of mortgages.  At Bank of America, it is four mortgages.  That means that someone looking for a mortgage with a great income, perfect credit, and loads of properties with tons of equity will be rejected by some lending institutions if they have more than a certain number of mortgages.  It would seem to be that such an applicant would be the ideal person to lend money to for the buying of more real estate, based on their experience and payment history.

That presents a tremendous opportunity to a private mortgage lender.  There are two ways to profit from being a private mortgage lender according to Jerry Cohen, President of EquityBuild, a premier private mortgage investment firm:  “There are two methods for getting started in private mortgages: Mortgage Pools and Direct Lending.  Mortgage pools are like the mutual funds of private mortgages. Each investor's money is pooled with the other investors participating in the pool and the money is used for private lending.

Cohen, who was just awarded the prestigious “Moving America Forward” honor for the success of EquityBuild and EquityBuild Finance, its financial arm, furthered that, “Direct lending is typically reserved for seasoned real estate professionals due to the level of expertise that is needed to identify undervalued properties...”

There are other ways for private mortgage lenders to profit from traditional entities turning away what could be the best borrowers.  Lending standards are very rigid now.  Borrowers who are self-employed have to provide very detailed, thorough documentation.  Some who are excellent candidates for a mortgage might not be able to present these papers with their loan application.  As a result, they will be denied a real estate loan by a bank, credit union, or mortgage broker.

But the private mortgage provider can easily recognize the value in lending to such a person.  This flexibility is one of the major advantages of obtaining a private mortgage.  The speed in which it can be approved and funded is another huge benefit.  With a private mortgage, there is no waiting for the monthly loan committee meeting to take place.

Private mortgage lenders can have their pick of borrowers with great credit and solid experience in real estate.  That would seem to be the most desired client, but traditional lenders are not cutting them off if too many mortgages are obtained.  For the private mortgage entity, that should be ideal client to lend to and develop into a frequent borrower.