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Many investors today are providing private money lending. What this means is they will make available the funds to a buyer to purchase a property. To secure payment and their asset it is standard practice to have the borrower execute a Mortgage Note and Deed of Trust. The biggest challenge with this can be investors utilizing a note and deed that they either have been written by their attorney or that they find online. We would like to provide some additional things to remember when you are reviewing the documents to make sure you are protecting yourself and the asset.
The following items should be within the documents prior to closing and recording.
☐ Interest Rate
☐ Prepayment penalty(if applicable)
☐ Late fee
☐ Grace period
☐ First payment date
☐ Maturity Date
☐ Default requirements
☐ Default expenses (who pays)
☐ Balloon payments (if applicable)
☐ Rental clause
Also there maybe be riders that need to be attached to the Deed of Trust should you have certain provisions to the loan. The following are some potential riders to remember, however it is best to speak with the title company of attorney to verify what is needed.
☐ Adjustable Rate Rider
☐ Balloon Rider
☐ Condominium Rider
☐ Planned Unit Development Rider
☐ Second Home Rider
☐ 1-4 Family Unit Rider