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Q1. What is a Private Mortgage?
A Private Mortgage is a security instrument for real estate loans. The specifics of the loan are detailed in a separate promissory note, and the private mortgage is recorded at the county recorder's office. The Private Mortgage serves legal notice to the world that the subject property is pledged to secure a loan. It also provides for a rapid method of foreclosure should a borrower default on a loan. Our marketing name for Private Mortgages is Mortgage Investment Opportunities (MIO).
Q2. What borrower pays such high rates?
These loans are short-term bridge loans that are utilized to purchase real estate at a discount. It is not the cost of money that counts but the availability. Many of our properties are from motivated banks/lenders and/or private sellers in which we negotiate very low sales prices by executing accelerated closings.
A great example of this is commonly known as a pre-foreclosure "short-sale" where a bank accepts less than owed for the property in order to sell it quickly to avoid a lengthy foreclosure process or simply to remove any non-performing assets from their books. Often financial institutions such as traditional mortgage companies take 30 to 45 days and sometimes longer to fund these transactions thereby creating a tremendous opportunity for our private lenders to earn such high yields.
Q3. Is this a mortgage pool?
No. Every investor has the opportunity to review each loan request before they decide to invest with us. Additionally, only bonded escrow title companies handle investor funds. After funds are wired to the title company the investor (or their IRA) receives a promissory note and first mortgage as collateral for the loan. One investor, one property, one Private Mortgage.
Q4. Do you have any properties ready today for a Private Mortgage?
Probably yes. We try to keep our current opportunities updated on a weekly basis. Simply call us and talk to us about the current opportunities that may interest you.
Q4. What if the property value drops?
Keep in mind that the real estate that we buy is already deeply discounted. In addition, our loan opportunities are usually short-term, 6 to 36 months. Because of these factors, it’s unlikely that the real estate would change dramatically within that short time interval.
Q5. Have you ever foreclosed on a property?
No. Its worth noting that TrustPoint Financial Corp. has never been involved on having a property foreclosed. Furthermore, our investors have never lost any money in interest or principal with our program.
Q6. How do I know that I can trust you?
The good news is it does not take a leap of faith and there is no guesswork involved here. We inform you on all of the following before you invest:
In addition, since your transaction is completed through a third party Title Company, your name appears right on all the official loan documents. And the funds never enter our account until the loan is closed. You will receive the following from our office about 1-2 weeks after the loan closes:
Q7. Why haven’t I heard about this type of investment before now?
Big players in the investment world, Wall Street and Mutual Fund Companies, don’t talk about this because they would miss opportunities to sell stocks and other investments and lose out on many large commissions. Private Mortgages are not a mass produced investment so banks, stock brokers, and mutual fund companies don’t offer this type of specialized investment. Private Mortgages are typically funded by private individuals and not brokerage companies.
Q8. What if I need to pull my investment dollars out of the loan early?
If you need to take your money out of an investment early, we try to simply find another investor we can assign your mortgage to replace your involvement. We perform this service on a best efforts basis which means there is no guarantee that we can find a replacement. However, if we are successful, this process can take up to 90 days to complete. Then again, unlike a bank CD, there is no penalty for early withdrawal, just a small filing fee required by the county. Just call us, and we’ll handle all of the details. However, you really shouldn’t make mortgage loans if you feel you will need to liquidate shortly.
Q9. How many Private Mortgages should I own at one time?
For most investors, we recommend one to start with so you can get the flavor of this type of investing, and once you are comfortable, up to five.
Q10. What would my CPA or attorney say about this?
We always recommend that you check with either your attorney and/or CPA before making any major investment decisions. We would also advise you to talk to with someone who is familiar with Private Mortgage investing and has experience in lending on real estate.
Q11. Are their any hidden fees?
No. The only fee that needs to be paid by the Private Mortgage Lender is a small preparation fee. Furthermore, since all of the property that is being offered for Private Mortgage is in our portfolio, there are no loan service fees.
Q12. How can I get started now as an Investor?
Take the first step is to e-mail us or call us about current and upcoming investment opportunities. Feel free to present other questions to us as well. We want you to feel confident about investment decisions.
Q13. Which investors are a good fit for Private Mortgage Investing?
People who have money invested in other investments. Other investments are probably not earning a maximum return on your principal or making the maximum use of your time. In addition, a few are pretty risky choices. Many people choose other types of investments, because they are not aware about other opportunities such as Private Mortgage investing.
People who have cash on hand. Build wealth using the banks money. Furthermore, some of our investors have pulled equity dollars out their home and invested in our program earning a 6% or more positive spread on interest. Put your home equity dollars to work and cash-out the equity in your home.
People who want a lower maintenance investment. Diversify over to private lending to earn at least 9% return with less risk and much fewer hassles. If you are tired with the constant monitoring and requirement of investing in the stock market you will be pleasantly surprised with trust deed investing. Once you invest you won’t have to do any monitoring except collect your monthly interest checks.
Q14. Which investors are NOT a good fit for Private Mortgage Investing?
People who are looking to get rich overnight. Private Mortgage investing is not a get rich quick scheme. It is, however, an ideal way to consistently maximize your investment dollars over time at a lower risk offering you a healthy annual return and without the hassle of managing all the details.
People who can’t bear the thought of some risk. As we explained, your investment dollars are protected by the collateral & the equity in property. However this opportunity, like most, is not totally risk-free. These financial instruments are NOT FDIC insured and in theory, could lose value.
People who are unable to be prepared for the minimum investment periods available. If you anticipate that you will need your investment within the next 24 months, we would encourage you to wait until the funds could be invested and left untouched for that period of time.
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