HML's and PML's

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HML's and PML's

Pat A
Real Estate Investor · Los Angeles, CA · Member since 2010 · 18 posts · 0 votes

I was just reading various topics and I saw a lot of HML's and PML's wording. I thought they are the same but not sure.

Are they the same? What the difference? (I couldn't find it when I googled it)

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
16y

Hard Money Loan - A loan that is underwritten with the condition and value of the property as the primary criteria for approval. Secondary issues may include the ability of the borrower to repay the loan and/or the ability of the borrower to manage the property or successfully complete a rehab and sell the property. Owner occupancy, debt ratios and other issues are seldom a factor. Appraisals are another key benefit. These loans are usually approved within days and are often funded in two weeks or under with times as short as two or three days not uncommon. The cost for the benefits of speed of funding, lax underwriting and other advantages is typically a moderately high interest rate (usually low to mid teens) and high points (usually 5 to 10).

Private Money Loan - A loan from an individual rather than an institution. The loan will have criteria different from institutional loans unique to the individual offering the loan.

There can be and often is an overlap between hard money and private mortgage loans.

Private Mortgage Financing Partners, LLC
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  • Steve L.
    Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    16y

    I have a different definition from Tom.

    Hard Money to me usually means a company or person that specializes in loaning money (their own or others) on real estate. They usually have stringent and consistent guidelines (LTV, term of loan, etc). Hard Money lenders usually work with multiple investors and do many deals (it's their business).

    Private Money is a broader category and the relationship/terms are usually more negotiable. EG: You have a family friend that will loan 100% of the money for 50% of the profits. Maybe it's someone who will do a long-term loan at 8%.

    Private money lenders are usually more based on relationship and probably not working with very many investors. You can be more creative on the terms to create a win-win for both parties.

    Usually, most of these people are just passive investors looking to grow their money or invest part-time.

    4Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    16y

    Hard Money Loan - A loan that is underwritten with the condition and value of the property as the primary criteria for approval. Secondary issues may include the ability of the borrower to repay the loan and/or the ability of the borrower to manage the property or successfully complete a rehab and sell the property. Owner occupancy, debt ratios and other issues are seldom a factor. Appraisals are another key benefit. These loans are usually approved within days and are often funded in two weeks or under with times as short as two or three days not uncommon. The cost for the benefits of speed of funding, lax underwriting and other advantages is typically a moderately high interest rate (usually low to mid teens) and high points (usually 5 to 10).

    Private Money Loan - A loan from an individual rather than an institution. The loan will have criteria different from institutional loans unique to the individual offering the loan.

    There can be and often is an overlap between hard money and private mortgage loans.

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    5Reply
  • Pat A
    OP
    Real Estate Investor · Los Angeles, CA · Member since 2010 · 18 posts · 0 votes
    16y

    Thank you for all the response. I guess it doesn't matter whether it's HML or PML. I just need to look at their fees and interest.
    And it seems like both HML and PML provide "transactional funding", anyway.

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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    16y

    Tom, your loans are BOTH hard money and private mortgage loans. The two terms are not mutually exclusive.

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    16y

    That's bumps for Steve and Don! Private Mortgage lenders are usually not in the business of making mortgage loans, where as HM guys are in the business.

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