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Be sure to familiarize yourself with the fees you are expected to pay.
Sounds high? Not for those who value the flexibility and simplicity of this form of lending. These are short-term loans designed for your specific needs. The return and profits must be captured by the lender in this short time and therefore first appear onerous to those unfamiliar with this type of mortgage facility.
Remember how much money the banks make from your residential mortgage? If you take 25 years to pay off your amortized home mortgage of $400,000.00 and average 5% interest over the life of the mortgage, you will have paid upwards of $300 Mark Scheifele North America Jersey ,000.00 in interest only, for the privilege of using the bank’s money. Put another way, that’s just about a 75% return to the banks. This is assuming a few issues:
1. You don’t move your mortgage to another lender and start another 25 year
term.
2. You maintain that 5% interest rate for the life of the mortgage.
3. You haven’t made additional payments along the way.
Keep in mind that the riskreward ratio is always at work here. Investors – those who supply the investment dollars to the brokerage or administrator (usually the private lender) – are taking a risk in lending you their hard-earned funds. And to this end, their reward must match their investment comfort level.
This is not advice to simply accept any interest rate thrown at you Ryan Nugent-Hopkins North America Jersey , but it is prudent to consider many aspects of the relationship moving forward. As an example, you may want to seek a lender who:
1. Provides knowledge and counsel to your team. Many of the underwriters and
various principles of a private lender have been part of many deals and probably a few like yours. They have seen what has succeeded and what has not. The willingness to provide this advice and counsel is worth more than any fee or interest rate you will pay.
2. Is flexible on fee payment options. Granted, the amount of fees required to be