Private Mortgage Offers
“Private Mortgage Offers Can Have A Very Limited Shelf Life”
One of the keys to getting a private mortgage offer in place is accepting it within the time period provided by the lender which is typically one week.
Unlike banks or institutional lenders that are used to providing competitive offers for real estate mortgage applications, not having them accepted, and seeing the borrower circle back to discuss an offer weeks or months later, private lenders work quite a bit differently.
First of all, you need to understand that a private lender is always interested in getting available cash out into mortgages as that’s how they make their money. As soon as money becomes available from mortgages that come due or from other sources, the lender’s goal is to start assessing relevant deals and accept deals they are prepared to fund.
If an offer for financing is not accepted within the time period provide, the private money lender may very well fund another deal with the same available funds. So if you sit on an offer for financing for an extended period of time, don’t be surprised if the lender cannot complete the transaction weeks or months later as the money that was available has been placed and at the point in time when you circle back to the lender, they may not have available funds or are no longer interested in your deal.
In this regard, private lenders can continuously be in and out of available funds which is one of the more challenging aspects of locating and securing private funds at times.
Being that its a competitive market, you may not feel that this is a big deal, but it can be for a few different reasons.
First, private lenders all price their money differently. So if you miss out on a very competitive offer, there is no guarantee you will be able to find a similar offer.
Second, if you’re shopping around too long and start running out of time, a private mortgage offer you miss out on may not be so easy to replace, causing you to take what you can find in the time you have to work with even if it doesn’t really fit all your requirements or rate expectations.
The point here is that private lenders like to move quickly with people who are serious about taking action right away.
The longer you take to make a borrowing decision, the less likely options will remain available to you either due to a lack of available funds, or a loss of interest in your deal.
Just remember that while there are lots of private lenders around, they aren’t always that easy to locate and based on the type of property you’re trying to leverage and your location, there can be a limited market at times for a given offer.