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Why would a Borrower seek a comparatively expensive private "hard money" mortgage rather than a conventional bank mortgage?

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1) Time Crunch: The Borrower has applied for a conventional bank mortgage, but the time-of-the-essence closing date is rapidly approaching, the bank is still completing it’s due diligence, yet the Buyer/Borrower simply has to close in a timely fashion in order to avoid losing a hefty contract deposit or missing out on some outstanding equity in a particular project. After closing the bridge loan with a Private Lender, the Borrower can then take as long as necessary to arrange permanent financing. 2) Transitional Property: Another typical case would involve a Borrower purchasing a vacant property that he plans to convert to another use. A bank would rather finance the deal AFTER the Borrower has executed his business plan, rented the property and created cash flow. The Private Lender is willing to get more deeply involved than most banks, evaluating the Borrower’s past track record, the viability of the Borrower’s current business plan to convert/improve the property, as well as the ... more
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1) Time Crunch: The Borrower has applied for a conventional bank mortgage, but the time-of-the-essence closing date is rapidly approaching, the bank is still completing it’s due diligence, yet the Buyer/Borrower simply has to close in a timely fashion in order to avoid losing a hefty contract deposit or missing out on some outstanding equity in a particular project. After closing the bridge loan with a Private Lender, the Borrower can then take as long as necessary to arrange permanent financing. 2) Transitional Property: Another typical case would involve a Borrower purchasing a vacant property that he plans to convert to another use. A bank would rather finance the deal AFTER the Borrower has executed his business plan, rented the property and created cash flow. The Private Lender is willing to get more deeply involved than most banks, evaluating the Borrower’s past track record, the viability of the Borrower’s current business plan to convert/improve the property, as well as the ... more
make18guaranteed.com
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