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Hypocrisy_Central's avatar

When borrowing from private lenders, how should one handle the cost of the underwriting?

Asked by Hypocrisy_Central (26821points) February 7th, 2012

In these tough economic times, many people have to rely on private money. Usually a deal like that is unique between the lender and the borrower. That means the deal has to be structured, wrote up officially, and legally, that usually mean lawyers, bank wire fees, copies of the document, etc. Should the lender front these fees, or the borrower? Many borrowers do not want to pay these fees because they feel they are ”paying for a loan”. They often are getting the loan with weak collateral or none at all, even if they are paying slightly higher interest. The borrower is often getting more money than their net worth. Is it that unfair for the lender to ask them to cover the underwriting cost for the money they are asking for? Even if they (the borrower) don’t cover it all, but most, is the lender being unfair to the borrower when they are getting money they never would get if they tried to get it from a bank?

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2 Answers

dabbler's avatar

One way or the other the borrower pays.

tranquilsea's avatar

I’d think that the cost would be something you could try to negotiate. You may not be able to but there’s no harm trying.

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