What’s the difference between private money vs. hard money loans?
Private money comes from private sources such as busy professionals, retirees, and wealthy investors. Hard money is most often borrowed from non-bank financial institutions.
Private money offers you more flexibility and is usually offered without traditional qualification guidelines required by a bank or lending institution. The interest rates and fees associated with private money are generally lower than those associated with hard money.
In addition to higher rates and fees, most hard money lenders expect to see their loans repaid quickly, in as little as 6-months.
Both private money and hard money loans are based on the quality and value of the asset, although private money lenders will often lend up to 90% of the value of the property (and sometimes up to 100%), while hard money lenders often lend no more than 60-70% of the property value and may require collateral in addition to the property.