Private Money lender - potential costs/fees?

[Tasha Smith]

Hi All, We're considering our first private loan and have calculated our costs based on an initial conversation with the investor. Our question is, from initial agreement through closing, what costs may we incur outside of management fee and interest that are part of the terms? Ex. Attorney? Appreciate your insights.

[Jacqueline Wright]

Tasha, congrats on considering your first private loan! Private money lending often comes with fewer restrictions compared to traditional lending, but there are still a few costs you might incur throughout the process.

Private lenders often charge points (1-3% of the loan amount) as an upfront fee. One point equals 1% of the loan amount, so on a $100,000 loan, 2 points would be $2,000.