Nothing, in our opinion.They are essentially the same, both provide short-term loans to real estate investors at higher interest rates than banks and other institutional lenders. Check out this Guide for more on this topic.

Private Lender Link is not the best resource to find lenders that offer 100% financing or “no money down” loans. Almost all of the lenders in our network require the borrower to have some equity (cash), but there are a few exceptions. If you are seeking a “no money down” loan secured by real estate, check out our 100% Financing Guide to learn about a few options.

Every lender has different credit score requirements. Take a look at each lender’s profile page and find the “Minimum Credit Score” field. Many private lending companies don’t have a minimum score requirement, and will lend only based on the equity in the deal. Most lenders will run a credit check on the borrowers just to make sure there are no judgements or liens which were not disclosed and may have an effect on the new loan.

Government regulation is the main reason. Owner-occupied home loans, also known as “consumer mortgages” are heavily regulated by the federal and state governments. Full documentation is typically required. If a borrower defaults on a loan secured by their primary residence, they can easily claim predatory lending and stay in the home without making payments for a long period of time. If the property is an investment and the borrower defaults, the foreclosure process is much easier. There are some exceptions and alternatives to get a loan from a bank. Check out our Owner-Occupied Guide to learn more.

A loan provided by a non-institutional lender secured by commercial or residential real estate

A loan provided by a non-institutional lender secured by commercial or residential real estate, typically with a short term, less than 3 years

A loan provided by a non-institutional lender secured by commercial or residential real estate, typically with a short term ranging from a few days to 3 years

Short-term financing secured by residential or commercial real estate

Financing for investment real estate, which is a hybrid of debt and equity

Loan-to-Value

Loan-to-Cost

Origination fees charged by a private lender, in addition to the interest rate

Fee charged for paying off a private money or hard money loan early. A number of private lenders do not charge any prepayment penalties and you can pay off your private loan within 30 days if you wanted to. Many private lenders will want to get a minimum interest return, so they may write up the loan with a 12-month term and a 6-month prepay. Every private lender has a different policy and some are willing to negotiate.

Using equity in one or more additional properties to secure a private mortgage

Renovating a property after the acquisition to increase the value

After Repair Value

REI

Real Estate Investment

LOI

Letter of Intent. Essentially a “hard” quote which spells out the general terms of a private money or hard money loan, including amount, interest rate, fees, loan term, collateral, etc.

Same as LOI. A document which states the general terms of the private mortgage - including amount, interest rate, fees, loan term, collateral, etc.

A “pre-approval letter” provided by a private money lender to a real estate investor which states that the investor will have the funds needed to purchase a property upon closing.

When a private lender holds a private mortgage secured by a property and is willing to reduce the remaining loan balance in order to be paid off before the end of the loan term. When a private lender offers a discounted payoff, the borrower will typically seek a refinance loan from another private lender.

Borrower’s primary residence or 2nd home. If a residential property has 4 units and the borrower lives in one of the units, the property is still considered as owner-occupied. Any residential property with more than 4 units is considered a commercial property.

When private lenders use this term in the context of a borrower “having liquidity” it typically means a sufficient amount cash in their bank account to cover interest payments and other expenses to operate the investment property during the term of the loan.

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