A private money lender is a person or could be a company which provides loan to the real estate investor with private funding and also specialize in the real estate industry.
Normally, some of the investors make money by a getting the property at a lower price and selling them it at the higher price and commonly known as “flipping” the property. Other investors hold on the property and lease the property or rent it for long term residual income. There are many other who is making money by the same property, without using the above 2 ways. These money lenders are often known as private lender.
As it gradually becoming difficult to refinance and borrow from the traditional banks, more and more consumers are attracted towards the private lenders for the loan. However, this type of strategy may cost you little bit but it is safe, hassle free and you could get the loan without any delay.
Comparing the Refinance Rates – As the traditional mortgage market is in trouble, many consumers who need refinancing the existing debts or mortgage are opting towards the private loan field. Many businesses also are now looking for the private lenders for the commercial loans because today’s economy provides great opportunity to the investor to hire the construction or purchase a property at a discounted price. Usually, Banks tightened the business loans and create a huge niche for the private lenders to fill the gap. It is also advisable to compare the rates for more than 4 private lenders before you actually borrow the amount of money.
Faster service but higher rates – Normally, private lender charge a higher rates of interest because they are the last source of money. If a borrower wants the fast cash in order to seize the opportunity to complete a project in the specific time then the conventional lenders could take up 2 months to close the loan transactions. Whereas a private lender could settle the same deal in few days as long the consumer is willing to pay a premium and hefty down payment.