How do i protect myself when getting a Private Loan

[Efrain Torrez]

I got approved for $250k @ 5% for 30 yrs by a private loan company.  I now have to pay 2 points ($5k) for loan fees up front.  Since everything was done online by email and a few phone calls I'm not sure if i should be protecting myself somehow before I send $5k to someone I've never met in person.  How would you go about protecting yourself in this situation?  This is my first time getting a loan like this and this might be completely normal but I thought I'd ask and see if there's anything I should do.  Thanks in advance!

[Jon K.]

This sounds very alarming. I'm assuming this is a loan for the purchase of or refinance of a property. Points are either added to the loan balance at closing, or paid out of buyer closing costs at closing. Not pre-paid directly to a lender regardless of whether they're a private lender or not. What sense does it make to send them money only to have them send it back? This has scam written all over it.

When obtaining a loan for a property, whether its a purchase or refinance, a title company should be handling the logistics. They are the only one to whom you should be sending money. An exception may be something like paying for an appraisal or an inspection out of pocket before closing. But pre-paying points by sending money to the lender? I wouldn't do it.