Private Mortgage Requirements
“Private Mortgage Requirements Can Be Substantially Cheaper Than Low Rate Alternatives”
Before you get too hung up on a commercial mortgage interest rate in the 4% to 6% range, think about what its going to cost to get the mortgage in place.
After you’ve paid for a new appraisal, a new environmental audit and potentially some clean up, and a new set of financial statements to start with, you can easily have dropped somewhere between $10,000 and $20,000 and watched several months go by which may have ended up costing you even more money.
Not all the time, but in more instances than you might think, private commercial mortgages can get done with dated information. If the information is still representative of the real estate being offered as security, its not uncommon for private lenders to utilize appraisals and environmental audits that are several years old. And because current financial statements are less critical to equity based lending decisions, the most recently completed financial information can work just fine with a large number of private lenders.
This is the place where logical and common sense come into play as you’re dealing with a seasoned investor in many cases who does not need to force you to spend a bunch of money to update information that is unlikely to add any value to their lending decision.
When this is the case, the application, approval, and funding process can go quite quickly compared to what you would be facing with most bank or institutional commercial lending processes.
In the end, like everything else in business, its all about time and money.
And in certain situations, the private mortgage requirements you need to meet on a mortgage commitment may end up saving you both in the short term, with short term lending being the primary purpose for private mortgages in the first place.
The point here is not to get overly focused in on rate and to make allowances for all the costs that you’re going to incur to get a mortgage in place as well as the time its going to take.
If you are in need of a private commercial mortgage right away, I suggest that you give me a call so we can go through your requirements together and discuss the most cost effective and timely options available to you.