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» Why 20% Borrower Equity?

Posted on 12/3/2004
The biggest stumbling block in obtaining a hard money loan for most borrowers is the requirement to have at least 20% personal equity in the project. So many people believe they can get 100% financing or more and spend months searching for what does not exist. The reason lenders want a borrower to have a reasonable personal equity in a project is as follows: in the event that the borrower hits a 'bump in the road', the lender does not want the keys to be dropped off with the flippant words, "Oh well, I didn't have anything in this anyway. It was a good try." Believe me, it's happened!
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