Private Money

Private Money is usually loaned to individuals by private investors. The investors loan the money to individuals under certain terms.

The terms depend on the strength of the application and the collateral used for the loan.

Terms for Hard Money

Private Money requires a collateral. The collateral should be such that in case an individual defaults on the loan, the investors can still recover their money. In case of real estate as a collateral, private investors usually like to take the first lien position and can loan anywhere from 50-65% of the value of the property. The value of property should be based on comps and a recent appraisal. People with low credit scores also look out for a private money mortgage.

Since hard money is given by private lenders, the interest rate terms are usually higher than a conventional loan. Typical interest rates range anywhere from 10% to 15% or higher depending on the profile of the borrower in terms of their finances and credit. The investors also charge points in the range of 5-7 or higher depending on the deal.


Why Private Money?

Hard money loans are lucrative to deals that are time sensitive. If all the proper documents are turned in for review for a private money loan these deals are done within 10-20 days or less.


Since the investors get a lot of deals for hard money, it is important to present the appropriate information in the first attempt to make the offer look lucrative for the investors.

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