5 Things to Look for in a Private Money Lender

Private money real estate mortgages are a great alternative to bank or traditional mortgages. Not everyone qualifies for a bank loan and some property owners and borrowers prefer the convenience of a private lender as opposed to obtaining a loan through a bank or traditional mortgage lender.


If you are looking for a private money lender, speed is a very important part of the service. Most people who borrower private money loans will pay higher interest rates and settlement fees, but they expect their loans to close fast and fairly easily.
A good private lender should be able to provide you with a written loan proposal within hours or days and afterward follow through by funding your loan quickly. Private money loans can be funded in weeks and in many cases in days.
If your private money lender cannot offer a written conditional loan proposal within hours or within a few days, it’s time to look elsewhere. There are hundreds of private lenders and millions of private dollars ready to fund your deal.


When looking for a private money lender, you don’t want to work with someone who is rigid. It will benefit you more if you can find someone who will look at your problems and try to find a workaround instead of rejecting your application due to factors that will not even affect the outcome of the loan.
Private money lenders are equity lenders and look primarily to the property and not a borrower’s income or credit. You should find a private money lender who wants to help you and who is willing to tailor the loan to your unique needs and circumstances. For example, if you have an existing mortgage with a low-interest rate, it may be in your best interests to borrower a 2nd mortgage from a private lender and not pay off the existing loan. A caring and creative private lender will offer solutions and alternatives to help you by providing the loan that is best for you.

Repeat Business

A good private mortgage lender will have repeat customers who return to them for multiple private mortgages. Customer satisfaction is the most important measure of a successful loan transaction and it should be one of the chief goals of a private lender – repeat business through customer satisfaction.

Reasonable Charges

Private money mortgages have higher interest rates and the loan origination and settlement fees are typically higher than bank and traditional loans. It should not feel like you’ve had a root canal and had been charged exorbitant fees for a private mortgage. A professional private lender will attempt to work with you and offer a rate and settlement charges that are fair for all parties.

If you are overpaying and not satisfied with your private money lender it’s time to shop around and find a company that can offer you a loan product with rates, fees, and terms that you are happy with.

Loan Specialty

As you’d expect, private money lenders tailor their companies around a specific group of people. For instance, some target real estate customers, and some provide payday loans and short-term financing. Depending on the type of loan that you need, you must also find a lender who specializes in the type of loan you are looking for.

These are some of the things to consider when looking for a private money lender. If you get the best lender, you will likely get the most out of your loan. Therefore, you must take time to find out if the lender you want meets these criteria.

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