Good Private Lenders Move Quickly
“If You Get A Private Mortgage Commitment From A Good Private Lending Source, Make Sure You Decide Quickly On Whether To Take It Or Not”
A good private lender knows what they’re interested in, assesses an opportunity quickly, and moves to fund and close as quickly as possible.
Because when good privates have money available to lend, they want to get it out into the market as quickly as possible due to the fact that they aren’t earning much more than bank interest when they are in a cash position.
They’re goal is to get available cash placed quickly and continue making their targeted level of return.
This also means that they are also in and out of the market based on money availability to lend.
So when they make you an offer, you’d better consider it quickly as it won’t stay on the table long if another opportunity presents itself while the private lender is waiting to hear back from you.
For the better deals, there is also competition among lenders, so they also want to move quickly to complete the deal and avoid or minimize the possibility that they could lose the deal to someone else.
Contrast this with less experienced private lenders, who may have money available to lend most of the time, but are more conservative in assessing deals and providing commitments.
Solid sources of private mortgage financing will assess a deal quickly and decide quickly if its something they are interested in or not. If they’re not interested, you typically know right away, sometimes within the same day that they receive a financing package.
When a term sheet, letter of interest, or commitment is issued, its usually only going to be good for five to seven days.
After that, the lender/investor may very well move on to another deal and remove their interest in your application all together.
This is not to say that if you circled back to any private lender weeks or months after an initial commitment was provided to you that they still wouldn’t be interested in the deal.
The challenge is will they have available money when you come back to see them sufficient to meet your requirements?
The Apples And Oranges Of Mortgage Lending
This of course is the complete opposite of anything you have experienced with a bank or institutional mortgage lender.
In most cases, even if your offer to finance lapses, you can go back any time and start all over again with them without there being any concern that they all of a sudden couldn’t or wouldn’t do the deal.
But taking a bank type approach with a private lender can see you end up losing out on an acceptable mortgage offering.
So make sure that if you’re after private money that you’re ready to decide quickly when an option is presented.
One of the best ways to be prepared for this is to establish and acceptable range of rates and terms and if a deal is presented that fits the range, you likely should seriously consider it and do it quickly while it remains valid.
There is never a guarantee that a better deal or comparable deal will surface in the time you have to work with so its good to be prepared to make a quick decision.
Click Here To Speak With Toronto Private Mortgage Broker Joe Walsh