Why would anyone borrow money at 10%+?
I often get this question from new lenders/investors, people that are learning about the private mortgage world, or from anyone that hears about how I help regular every day people earn 8% to 18% returns on their money.
I received this question yesterday via email from one of our newer lender/investors:
WHY would this borrower be willing to pay 12.35% money, plus fees/ legal/ etc, when they have so much equity and income? One would ‘assume’ you should be able to ‘convince’, one of the banks to get you a loan at less than half the rate?!
These were the same questions I had when I was learning about private financing. There are many reasons, but here are a couple. This was my response to his inquiry:
Good questions. Once a borrower misses payments on his current mortgage, there are few (if any) traditional lenders that will lend to the client. Since he missed some payments, and the lender asked to be paid out, any other bank will request the current mortgage statement and see the arrears and will "pass" on the deal.
This is one of the many reasons why we get to do what we do and earn excellent returns. Another common situation is if a borrower has $25k owing in personal taxes. No bank will refinance you if you have personal taxes owing. Even if you use the new mortgage proceeds to pay back taxes! So we will come in, fund a new mortgage to pay off taxes that are owed, and the borrower will refinance with a bank in 3 to 8 months and pay us out.
The reason people need private mortgages is sometimes they have no other choice.
What other questions do you have about why someone would be willing to pay 10%+ on a private mortgage?
0
0 comments
Steven Loewer
1
Why would anyone borrow money at 10%+?
Private Mortgage Lending
skool.com/private-mortgage-lending-7500
All things Private Mortgages: Education, How to Get Started, Insider Secrets, Industry Experts, Real Deals, and a community to support each other.
powered by