What are the Risks and Benefits?
Since the typical loan will be for 50-60% of the property value, the property "secures" the loan. Sharing the risk this way, both the lender (or investor) and the borrower have a very secure financial transaction. The lender gets a good return and the borrower has a substantial investment in his property.
As a result, privately funded mortgages provide borrowers with equity based loans, freeing up funds with little cost, and in relatively short periods of time.
DeFranco Real Estate Corp. has been specializing in this kind of financial partnership and have been very successful. Though not a common approach among traditional mortgage houses, we find that with the right level of service, we have established an excellent source of funding for the right projects.
