What is the difference between a hard money and a private money lender?
What is a private lender?
Private lenders are not licensed and have the ability to lend their money to whoever and whatever they want. Private money lenders are typically private citizens who loan you money based on their terms. For example, a private lender can be a friend, a business, a family member, or anyone who sees potential in your project. Unlike a hard money lender or a bank, there is a ton of flexibility with a private lender. With not having so much overhead, when you are working with private money lenders you and the lender will come up with your own loan terms.
What is a hard money lender?
Hard Money lenders are organized money lenders who are licensed to loan money. Hard money lenders have a lot of hoops to jump through as there is a lot of overhead. Therefore they will typically take longer to close. When you are working with a hard money lender you are required to provide a lot of documentation, want to see your finances, etc. Hard money loans are asset based only, the loan is secured by real property. So if you don’t make your payments they can foreclose on the property. All transactions with a Hard money lender are backed by their business licensing so they are accountable and accessible. Working with hard money lenders is a safe option for those who are looking for mainstream funding.
FUN FACT:
Here at Legacy Frontline Team we do Private and Hard Money loans! SO if you’re thinking about buying an investment property, reach out to us! We can help you decide which option will best fit your needs! Have a deal you want to discuss? CLICK HERE!
Thanks for reading!
Legacy Frontline Team