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What does "pre-funding a loan" mean?
What does "pre-funding a loan" mean?
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Written by Upright
Updated over a week ago

Upright pre-funds each rehab, new construction, or portfolio loan that is available for investment on our Platform. This means that the loans available for investment have already been fully funded by us with a first-position mortgage by the time you see it online.

Why we pre-fund loans:

Pre-funding allows Upright to provide certainty to borrowers that their project will be funded, which is very important to them. It also provides certain benefits for accredited investors, such as:

  1. Reliability
    Pre-funding demonstrates to lenders that we have thoroughly vetted the project, so much so that we’ve put our own capital into the project.

  2. Optimization
    Pre-funding also allows lenders to start earning interest as soon as their funds clear escrow. This improves the annual yield so you won’t have capital sitting in an account earning nothing while the deal waits to close.

  3. Speed
    The project is already underway by the time lenders invest. The mortgage has been perfected, title insurance is in place, and interest is accruing. You can sit back and wait for your first interest payment without any additional action required.

Common questions about pre-funding:

Q: If the deal is already funded, why does the site say it is only X% funded?
A: This is the percentage that other passive investors, like you, have funded. The remaining percentage is how much is left before the entire loan is funded.

Q: What happens if the loan doesn’t 100% fund on the site?
A: Since the loan is already funded by Upright, any percentage that isn’t funded by lenders is retained by Upright. We earn interest just like you do.

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