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Borrowing private money to buy your first home is gaining widespread acceptance, particularly with first time home buyers. Under the ideal situation, both sides can take advantage of this partnership. Borrowing from your family or close friends can help you secure your initial down payment, first home loan, and even a second home loan. Some good incentives to consider borrowing from your family or friends include:

1) Paying Less Interest While Still Receiving Tax Deductions - You can negotiate a more favorable interest loan with family members then with a regular lender. Savings can amount to thousands of dollars over the period of the loan if you pay 1 to 2% less in interest points. If you handle the paperwork correctly, you can receive the same interest tax deductions as a traditional loan. Consult with your tax advisor for details.

2) Flexible Payment Schedule - When you use a private mortgage lender, you’ll get more flexibility with the payment schedule them with a bank. You have the option of making quarterly payments or even negotiating a grace period of zero payments for a few years. Also if circumstances occur where you’ll need to stop working temporarily, you can arrange for a temporary pause in payments until your circumstances improve. You won’t find a lender that flexible.

3) No Points Or Bank Fees - Banks can easily gouge you with thousands of dollars for loan application costs and other points. Your family and friends will spare you these high costs.

4) Not Credit Score Dependent - Unlike a bank that will require you to have a perfect credit score, a family member will be less worried about your score if they trust you to be responsible in repaying the loan.

5) No Private Mortgage Insurance (PMI) - When you borrow more than 80% of the purchase price from a bank, you’ll be required to pay PMI. Your family won’t require you to spend this fee.

6) Less Paperwork - With a traditional bank, you’ll have to complete a lengthy application form and present documentation to prove the validity of your income, assets, and monthly expenses before they even take a look at your mortgage application. If you get a loan from your family and close friends, you won’t be subjected to this amount of harassment.

7) Net More Profit - When you use private financing, you have the flexibility to act fast on a great deal-especially with a seller who’s facing a time deadline to move and will consider accepting a reduced offer.
A House’s Physical Condition Isn’t As Important - When you apply for regular bank financing, there’s a good chance you’ll be required to complete all major repairs prior to closing. A private lender won’t be as stringent allowing you to take advantage of a profitable fixer upper.

Are you searching for the best Fullerton homes for sale, then check out these local Fullerton Realtors to help you locate one.