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Private money Lenders earn their money by making loans and providing loan services to individuals who need private money loans (financing that is secured by real estate.) Private money lenders can be direct private money investors or simply brokers. Most professionals in the industry are actually brokers. Some private money lenders actually wear two hats, being both brokers and direct lenders. In this scenario, the private money professional usually funds only one or two small loans each year and acts as a broker to those seeking funding for the rest of the loans that come through the door.

Choosing if you want to seek the services a private money broker or a private money lender is much like deciding whether to buy a home with the help of a realtor or whether to work directly with the seller and bypass the professionals.

Benefits Of Using A Direct Private Money Lender

The benefits of working with a direct private money investor or lender are pretty straight forward: it will cost you less money working with the end investor. Brokers are paid for their work by charging points on the loan transaction, often times in addition to the points the end investor charges. Due to this, as you get more brokers lined up in your transaction, the more you are likely to pay in fees (such as points) to accommodate that cost.

If you have been lucky enough to find a direct private money lender who likes you as a borrower and your loan scenario, you will be able to talk with the investor or lender directly, avoiding the ?run around? that so many private money borrowers fall prey to. This can be both good and bad.

By working with a direct private money investor, you can avoid any communication issues, and this may allow you to close more quickly. Simply because no one knows your transaction in the manner you do, no one else can explain any potential negatives to your transaction better than you are able, and no one is as committed to your business and your private money loan as you are. The down side to this, on the other hand, is working with the direct private money lender means that your loan either funds or it doesn’t, there are no other options if the direct lender turns you down, except to go back to calling around for another direct lender who’s perameters your loan may fit.

Benefits of Working With a Broker

The benefits of using a broker are also straight forward: a good broker will be well seasoned and will have already built the relationships with the direct investors with whom your private money loan will fit, saving you a lot of time and legwork. Having a broker work with you will give you the help you need to properly package your loan, improving the chances that you are able to obtain the funding you need at the terms you desire in the proper amount of time with minimal legwork and stress on your part. Working with a broker will be able to help you properly package your deal (which is very important) and send it to the right private money lenders for your particular situation. This may save you time and trouble in financing the transaction and be well worth the slightly higher cost.

When you get right down to it, your decision to deal with a good private money broker or directly with a hard private money lender will depend on whether or not you have access to an investor directly who lends private money and whether you are comfortable presenting and packaging your loan request without the assistance of a professional.