How am I protected as the lender?

As we continue with the frequently asked questions about private lending, we answer the question of: How am I protected as the lender?

Here is the answer that we provide to our private lenders about that:

You have the same paperwork that protects a bank has when they make loans to buy real estate: a note along with a mortgage or deed of trust.

Plus, just like the bank, we can purchase title insurance and property hazard insurance.

Unlike many banks that have loaned money at what I consider unreasonably high loan to values (sometimes as high as 125% of the value of the property), you can expect much lower loan to values when you are the lender.

Upon request, we can also pay for an independent third party appraisal of the property so that you can feel comfortable with a second professional opinion of the value of the property before making a loan.

Until my next post,

James

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