CHOOSING A LENDER
Working with a Lender who’s on “Your Team” can make all the difference in landing a property.
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Working with lenders can be tricky at times as it can be difficult to know if they are working in your best interest. Establishing a relationship with a lender early in your search can help reduce the guessing work and make your experience much easier. Here are some tips for choosing a lender……
- Find Someone you can Trust - Word-of-Mouth may seem old-fashioned but, when it comes to lenders, a great resource. They may have had a great experience or a terrible one. In either case, knowing their experience can help you with your decisions.
- Read Reviews - Oftentimes you can find reviews for well known lenders. Consider the positive and negative remarks. Though no one is perfect, it is important to know what you are getting into.
- Read Fine Print - Though it may seem boring to read, it is important you understand all terms and conditions that are legally binding.
- Ask For Help - Don't be afraid to reach out to us. We will be happy to help you when possible.
Types of Lenders
The type of lender you choose will largely depend on your needs and qualifications. Here are some of the basic kinds of lenders:
- Correspondent Lenders - Is a lender that self-funds a loan but hands off management to a larger company, who is then responsible for the billings and interactions with you, the client.
- Direct Lenders - banks, credit unions, online entities and other organizations that provide mortgages directly to consumers. This keeps most of the mortgage process more personal however rates and terms may vary widely between lenders
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Hard-Money Lenders - A group of private investors who provide short-term loans dependent on real estate. Generally giving one to five years to repay with high interest rates and closing fees.
- Mortgage Brokers - Licensed Individuals who connect lenders and borrowers. Paid in a percentage, and not responsible for decisions.
- Portfolio Lenders - Community banks, credit unions and savings and loans institutions that fund loans from bank deposits and hold on to the loans after closing.
- Wholesale Lenders - Work with mortgage brokers and third party companies and often offer lower rates. A broker will help the lender through approval of the loans and there will be no direct contact from the Wholesale Lender.
IMPORTANT LOAN TIPS:
- Credit Score (FICO Score) - Establishing a reliable credit score is important in applying for a loan. Though some private lenders make loans solely on the property value and loan to values, rates and terms start improving with cores over 650, and get even better when scores are 700 or more.
- Get Preapproved as soon as possible - Having a preapproval letter with a verification of funds (VOD) attached to your offer can often comfort a Seller more than a CASH offer, as the buyer's capabilities have been verified and approved.
- Compare Options - Rates, fees and terms very with lenders. Ask questions and take notes that you can refer to when making your decision. Don't be afraid to shop around until you find the right fit for you.
- Create a Budget - Know what you can spend and stick to your budget! Factor in things like interest and penalties and be sure to have up to three months mortgage set aside in case of emergency.
- Read the Fine Print - We say this twice because it is so important to know that you can follow through on your commitment and that you are finding the best possible options for your situation. READ THE FINE PRINT!