Going the private lending route can offer advantages to the borrower in many ways. Many investors actually lean on private lenders heavily as it affords them a bit more flexibility in the investment process. A strong relationship is then formed between private lenders and their clients, and as a portfolio grows, the mutual benefits reveal themselves and a long-term business relationship can then be formed between both parties.
But, how do you know you’re speaking with the right lender for your situation in the beginning stages? It goes without saying that, without the proper due diligence, you’ll never select the right private lender. Private lenders can and do come in various shapes and sizes, as do the rates attached to working with whomever you’re looking to seek funding from. How you qualify, the overall rates that apply, and other factors can vary depending on the lender you’re speaking with. Here’s a list of what you SHOULD be asking yourself before getting into any agreement with a private lender.
- Do I understand the terms?
Look, we can talk about personal relationships all we want. The most important language you need to understand when seeking is the terms. Regardless of personality, which is important, the terms cannot be overlooked because of who you’re sitting across the table from. One thing you do need to know, if you don’t already, is that rates from a private lender will be higher than a traditional lender. Understanding your rates means not comparing the rates of borrowing from a traditional institution to the private lender you’re meeting with. Ask a trained professional (like ME) to help you analyze your interaction and get a good feel for how transparent the process is.
- Is the loan securing process transparent?
You have to be kept aware throughout the entire process. There are various stages to securing a loan. Are you being kept in the loop? Does your loan application meet the guidelines of your province/state/country? Transparency from a trusted, reputable professional will help keep you at ease throughout the transaction process. After all, you need to have more than just a cursory knowledge of your loan details. Yes, your trust should be placed in the hands of your lender and you should expect that your best interests are being looked after.
- How responsive is the organization and/or my representative?
One of the benefits of working with a private lender is the expedited process of securing a loan when compared to traditional lenders. A private lender can do in days what a traditional lender might take weeks to accomplish. This is extremely beneficial when a commercial or residential property becomes available and the investment opportunity hinges on a more time-sensitive closing process. Securing funds with a trusted, responsive team can be the difference in getting the property you want…or missing out!
Let me help you. Feel free to get in touch with ME anytime and I’ll be happy to get you on your way to a mortgage that’s right for you and your loved ones.