Private Loans

[Nicole Starnes]

Does anyone know the qualifying criteria for private loans for real estate deals? Does personal credit matter? 

[Jon Holdman]

As do many HMLs, including the broker I work with.  I do not consider the terms interchangeable.  A private lender is someone you know personally who's willing to lend to you.  A hard money lender is a company that may well take money from individual and makes loans based on a set of critieria.  If someone advertises or responds to requests, they're probably a hard money lender, even if they're just lending their own money.

A hard money lender is like a used car dealer where a private money lender is like someone selling their own car.  I don't mean that with all the negative connonations associated with used car dealers.  I mean that if you're going to buy a car you're going to pay more from a dealer than from an individual.  And if you're selling a car you're going to get less if you sell to a dealer than if you sell to an individual.  But it takes effort to get an individual buyer connected with an individual seller and requires no small amount of trust to be established between the two.