Questions to ask Lenders
I thought it might be a good idea to develop a checklist of questions/requirements/red flags to help with due diligence on Lenders.
Please post if you can provide anything that you think is helpful, anything that might raise red flags.
1) What title companies do you use to close, can you send me a list of those companies? (Then call those companies to find out what information that might provide about the lender. How many deals they have closed, with the lender, how many deals did not get funded.....
2) How do you transfer funds? (Western Union is not how funds are transferred on a Real Estate transaction.
Hi Susan,
One of my biggest concerns with using a lender is their fees. I want to know how much their fees are from the onset of the process to avoid awkward negotiation or unplanned closing costs. Examples of these fees include a documentation preparation, funding, origination, and processing fees can be found on separate line items on the closing statement, but they are all essentially lender's profit fees.
You want to see what their fees are and what they include ( credit report, etc), you also want to make sure you are not being charged with points for a lower rate unless you are requesting it. Some lenders have credit report fee included in their fees, others you have to pay separate. You will always be responsible for paying the appraisal fee and you can have the lender shop for quotes for title company fees and they can provide you with at least 3 companies for quotes for home owners insurance. If you need any further assistance with your checklist, let me know, I work for a lender and can help get your questions answered.
How flexible can you be with lending?
What is an example of you getting creative to finance a property that didn't appear to be something you could lend on at first?
Do you keep any financing in house?
Typical rates?
How many months seasoning before I can refinance?
Those are the questions that first come to my mind.
Hey Susan,
I'm a lender and investor myself! These are all great questions. Another great one to add to the list is:
- What kind of a relationship do you have with your underwriting team? Are they in-house? What's the turn around time for response?
If they don't understand their underwriters, it could be a sign they are going to be hard to work with or that closing could be delayed.
Hope this helps!
Brooke