29 Jul 4 Things to Consider When Choosing a Private Money Lender
Private money is a term that’s often used in the finance and banking sector. It essentially refers to the money that’s loaned out to parties, for a short term, by non-institutional lenders such as private money lenders for the purpose of purchasing or renovating an investment property.
Some types of private money loans include:
Hard Money Loans – This type of loan is acquired by keeping a real estate property as collateral.
Bridge Loans – This kind of loan covers the cost of down payment and other immediate needs when a person is selling one property while purchasing another, but the transactions are not made back-to-back.
New Construction Loans – This type of loan is taken out on a short term when a buyer needs to begin construction for a house.
If you’re looking for a private money lender to acquire a loan, make sure you keep the following things in mind to make the right choice.
1. Credibility and Experience
These two things matter the most when it comes to private money lenders. You want someone who’s trustworthy and wouldn’t dupe you. To establish if the lender you’re choosing is credible or not, conduct a quick background check on them. Go online, check out their website and most importantly, speak to their previous clients. Moreover, make sure the lender has adequate experience, a good reputation and has been in the sector for a long time.
2. Loan Flexibility
Before you finalize your decision about going with a private money lender, make sure you’ve gone through the terms and conditions carefully and you’re comfortable with everything that’s on the documents. Often, the parameters for private money loans can be customized according to the borrower’s needs and requirements.
3. Interest Rates
Interest rates are important to keep in consideration when choosing a private money lender. Find your best option by looking for someone who’d loan you money at a favorable interest rate by comparing and contrasting different lenders.
4. Additional Fees
If you’re investing in real estate and taking out a loan, chances are you’re working on a tight budget and can’t afford to pay any additional fees such as, legal fees, documentation costs, underwriting fees, etc. Many private money lenders charge these additional fees from their clients. You have to make sure that you choose a lender who doesn’t!
Source – https://www.harperfinancialboston.com/blog/4-things-consider-choosing-private-money-lender/