How to know a real lender?

Question

Good morning! I just want to know how you know who a real lender is. What kind of questions should I ask them? The reason I’m asking is because I’ve been talking to this lender, and I see they have a verified check mark on their profile with the work premium next to the check mark.

River Sava · Answer

Hi Sole - Great questions as it can be tricky.

I recomend doing a web search on them in terms of their company and work social accounts. That usually can decipher a real lender. You can also hop on a call with them and ask tailored questions to see how they respond. Happy to send over some questions that might point you in the right direction when trying to weed them out

Mike Klarman · Answer

A scam artist will have no intention to close so they will ask for upfront origination fees or admin fees.  They know there will be no actual closing and you will never be wiring any money into an escrow account so they need you to pay them directly.  All lender fees always go on the HUD and are settled at closing, never upfront.

Now, some people are not scam artists but they are advantage seeking operators.  What does that mean?  Well, I have a rookie on the hook and instead of 2 points, I tell him 3 points, and instead of 12% I am going to tell him/her 13.5% and yield spread too.  This is a sales business.  The lenders have loan products they want to sell. They have in house salesmen but they also let independent agents called Brokers sell them as well because you can never have enough people selling your products.

So, the way you combat that is call a bunch of places.  Rates should be close, origination fees should be close.  Learn what the current market bears for a loan product for a borrower with your profile - exp, credit history.

Stacy Raskin · Answer

I would recommend working with a lender or mortgage broker who has an NMLS license. To get an NMLS license, you need to take relevant courses and there is a difficult test to get a NMLS license that more than half of the people fail that take it on their first try.

A lender doesn't need a license to do DSCR loans in many states but if they have a NMLS license in any state then they have a license they are going to try to keep and be better educated in lending overall.

Erik Estrada · Answer

You would need to make sure the individual has an NMLS license. You may easily look up the person on the NMLS site with their licensing number and find out if they are authorized to conduct business.

This mainly applies to 1-4 Unit residential transactions. Many Commercial lenders are not licensed, since there is not a specific license to originate 5+ Unit Commercial loans.

Many states require hard money lenders to be licensed as well. I would find out if that applies in your state.

When in doubt, I would just recommend working with licensed lenders. There is much more for them to lose if anything goes wrong in the transaction as you can easily report them.

Jonathan Taylor · Answer

Check their reviews on multiple platforms, make sure the reviews range in dates, check bigger pockets find a lender and ask other investors who they have used.

John O'Leary · Answer

@ sole Angel Identifying a legitimate lender involves asking pertinent questions to gauge their credibility. Firstly, inquire about upfront fees, as reputable lenders typically do not charge them, and collects all fee's at closing. Secondly, transparency is key—ensure the lender provides clear information about all fees and costs involved line by line. I would also seek a lender who can explain the range of loan programs available to you. Consider a lending partner thats invested in your success, offering coaching and consultation to mitigate risks and foster mutual growth, which ultimately makes the loan less risky for all parties involved.

How to know a real lender?

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