How does Private Lending work

[Jef A.]

I am interested in using private lending but a little reluctant because i am unsure of how i can protect myself using these services. The general idea of it that i have is if a property needs to much repair a traditional bank will not issue a loan for the property so i can use a private lender to buy the property and then rehab the property and then refinance the property with a traditional loan. Below are a couple questions i have regarding it. 

1. is their a pre-payment penalty with private money loans? If i ask for 12 months but want to refinance with traditional loan in 6 months is their a penalty for that?

2. Does the private money lender purchase the property and technically owns the property and then i do the repairs on the property? If that is the case what happens if they decide to keep the property after i do the repairs and not turn over ownership? What can i do to protect myself for this. 

3. Once i do try to re-finance if they own the property on paper do they set the price that the property will be? Can they do something shady like they purchase the property for 100K for me and i do the repairs. Then when i am ready to refinance they request 130K for the property. How do i protect myself from this?

4. My biggest concerns is about investing in a rehab for a property that i dont own and then them changing the terms at the last minute.