Private Mortgage Timelines
“Private Mortgage Commitments Can Have Very Short Shelf Lives”
Private mortgage lending can be very different from bank or institutional mortgage lending in certain ways.
One of those ways is with how mortgage commitments are handled and how they can exit for very short periods of time with private lenders compared to banks.
With private lending, a mortgage commitment typically will be issued for a period of one week. If at the end of the one week period, there is no guarantee that there will be any sort of extension whereas with a bank either an extension is granted or a new commitment issued if there is a change in rates and/or terms.
But banks and institutional lenders tend to have a large source of funds to deal with at any one time. Private lenders in most cases are placing their own money, so the goal when they have available funds is to place them as quickly as possible as they’re only making bank interest until they have a mortgage to invest in.
As a result, many private lenders are constantly in and out of the market in accordance with money they have available to fund financing requests.
So when a private lender provides a commitment to fund a mortgage, they are expecting it to be accepted and the process to continue to closing.
If you aren’t prepared to accept in the time provided you run the risk in the weeks or months ahead that the lender is either no longer interested in funding your requirements, or they don’t have any available funds or sufficient funds to fund your deal at a different point in time.
This is an important aspect of working with private lenders that should always be considered so that you don’t lose out on an acceptable offer due to timing.
In the bank or institutional mortgage financing world, individuals are used to shopping around the market for the best rates and terms and can take weeks and months going through this process.
With private mortgage lending, the shopping and decision making period is much shorter in nature in terms of what will remain available to you once offered.
The major risk here is that you return in the future to a private lender who previously offered you a mortgage and now is not prepared to reissue you a new commitment for whatever reason. If you can easily replace that offer with a similar or better offer, then there is no issue. But if you’re now pressed for time, you may end up having to settle for an inferior offer, or worse yet, not find suitable funding at all in the time you have to work with.
The key to working with private money and getting working to your advantage is through utilizing the services of a private mortgage broker who can not only help you locate and secure relevant sources of private mortgage lending, but also guide you through the decision making process when offers and commitments are being extended to you.
Click Here To Speak Directly To Private Mortgage Broker Joe Walsh