Difference Between Institutional And Private Money Lender

There are generally two types of lenders in the field of real estate – institutional lender and private lender. But do you know the difference between these?? No?? Okay!!! No worries, we are going to discuss about the basic type of lenders and difference among them.

Institutional money lender:  These are the money lenders who either work with the bank or any other organization. These lenders don’t have real estate background thus they don’t have much knowledge about the property.

Thus, if you ask them to lend money against your property then usually they will not agree. What important for them is good credit history, job, salary, bank statement etc. if you are good in all these attributes then you are eligible for the loan otherwise you have to look for other option.


Private money lenders: These money lenders either have real estate background or have knowledge about the real estate investing. Texas hard money lenders very well understand the situation and need of investors.

They have no link with any federal body and have their own rules and regulations to lend money. They don’t look for the borrower’s credit rating instead they evaluate the value of property. Based upon this they decide the amount of money to lend at which interest rate.

Generally the interest rate charged by them is higher the bank or institutional lender but they can lend you money without any long process of documents.

But it is always suggested to contact expert and experienced money lender because inexperienced lender will not be able to understand your situation and will act like a banker.