When you want to buy a home or a commercial property (or a two-in-one property), you try every route possible to get the money you need. Sometimes, all the routes you know of are blocked. There is just no way to get the money, or is there? A private money real estate broker/lender is what you need right now. Undoubtedly, you have some questions about borrowing money from a private party and a total stranger. Here are some typical questions, their answers, and what you need to know about private lenders and private lending.

If You Borrow from a Private Party, Does That Person Actually Own Your House?

​It is an uncomfortable thought, knowing that the money you borrowed from an individual is their money, and you are obligated to pay it back. However, that person is not interested in taking the property you buy away from you. You know that to be true when you make sure that the loan is accompanied by a legally binding contract that states that the lender has zero interest in the property and that you have to pay back every penny. Most of these private lenders are often real estate investors as well, but they are more interested in the profit gained on the interest they charge for lending people money. A loan of this sort garners interest payments that exceed the original amount of the loan several times over. 

What Happens When You Miss a Payment?

​If you miss a payment with one of these private lenders, there is a little more flexibility to work things out. The lender is more likely than a traditional lending institution to work with you to catch up on missed payments. If you miss several payments without reaching out to the lender, however, the lender may have to enact legal actions. If you can remedy the missed payments before things get that far, the lender can resume a normal lender/borrower relationship going forward.

​Is the Private Lender Licensed in Any Way?

​Some private lenders are investors. Some private lenders are real estate brokers. A few more are broker-lenders, which supply loans through atypical channels. All of these private lenders are licensed in some way or another. If they are licensed, you have the legal right to ask to see their professional licenses. They will show those licenses to you. If your private lender is just an investor not affiliated with any business or real estate group, make sure you read the contract with the lender closely.