THE RULES

MORGAGE RULES

There are a variety of reasons people are turning to private mortgage lending to enhance their investments, the primary reason being the current uncertain economic situation that is causing stocks and mutual funds to plummet. With private lending, your investment earns a higher rate of return than stocks and mutual funds, is secured by real property, as well as a mortgage insurance policy. What could be better these days when it comes to investing?

If you are considering getting involved with private mortgage lending, you will want to be aware of the financial reasons that are counter balanced by potentially negative reasons. Private mortgage lending is very beneficial and at the same token can be difficult depending upon how you manage it in this economic climate. Here are a few pros and cons to point you in the direction of private mortgage lending.

Pros

• As the lender, you are able to earn a high interest rate that is typically between 50 and 100 percent higher than the interest of conventional lending institutions.
• With private mortgage lending the investment is short term from 6 months up to 3 years earning you a high rate of return within a short period of time.
• Private lending in the current economic climate is more lucrative than investing in stocks and mutual funds.
• Private lending allows you to be creative with the financing which gives you better control over your money.
• You have the option to sell the private mortgage to companies that buy them in the event you need exit the deal before the loan matures.
• Private mortgage lending allows you to invest securely in real estate without having to deal with the hassles that come with it such as problems with tenants and property maintenance.
• You are in control of how long your money works for you.
• You have the option of using an IRA to invest in real estate while still enjoying the tax benefits of an IRA.

Cons

• A long-term decline in the economy could possibly negate the short-term advantages of the real estate investment if the property significantly decreases in value.
• With private lending, you are subject to state and federal laws that place a restriction on the amount of interest you earn.
• Private mortgage lending in general is a high risk investment because you are dealing with people who for one reason or another cannot secure a mortgage with a conventional lending institution.
• Private mortgage lending is considered issuing a Security on the state and federal level and you could face the possibility of running into complications with the SEC.
• The borrower may have a poor credit history and plan to refinance with a conventional lending institution. This could leave you in a sticky situation as the private mortgage holder in the deal.

I invite you to learn more about Private Morgage Lending and get my new FREE 20-page ebook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by clicking herehttp://realestatewealthtoday.com/FREE-eBook.html Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lending Presentation Kit. Article Source: http://EzineArticles.com/?expert=Mike_Lautensack