How to pick a lender?

Question

Besides the rate are there any specific things to think about when choosing a lender or broker for financing a conventional loan?

Abbey Humphreys · Answer

Hey Francis! When picking a lender, it's definitely important to weigh your options and make sure they can meet your needs. Here are some factors that are important in the consideration of this decision-

Loan Terms: Check the loan terms offered by different lenders, such as the length of the loan (e.g., 15, 20, or 30 years) and whether they offer fixed or adjustable-rate options. Choose the terms that best suit your financial situation and long-term goals.

Accessibility and Convenience: Consider whether the lender has a physical presence or operates entirely online. Choose an option that aligns with your preferences and allows you to communicate and access information conveniently.

Flexibility and Eligibility Criteria: Check the lender's eligibility criteria to ensure you meet their requirements. Some lenders may be more flexible than others, especially if you have unique financial circumstances.

Lender Reputation and Reviews: Research the lender's reputation and read reviews from previous customers. Look for lenders with positive feedback and a track record of excellent customer service.

Loan Products and Programs: Different lenders may offer a variety of loan products and programs. Ensure that the lender you choose provides the type of loan that aligns with your needs and financial situation.

Customer Service: A responsive and helpful customer service team can make the borrowing process much smoother. Consider a lender that offers good customer support and is willing to answer your questions.

Preapproval Process: Look into the lender's preapproval process. A preapproval can give you an advantage when negotiating with sellers, so choose a lender that can provide a quick and efficient preapproval.

Loan Processing Time: Ask about the average time it takes for the lender to process a loan application. If you're in a time-sensitive situation, a lender with a quick turnaround time can be crucial.

Ethan Gidcumb · Answer

Hey Francis! Some of the biggest things I have seen online from other investors is the lender's reputation. For a lot of people, they preach finding somebody that won't change terms on you on the 11th hour. For this, I would really recommend finding somebody that you can be referred to, or, finding somebody with really great reviews.

Farley Youman · Answer

Doug: great point about lenders that wait until the day before closing to state that they cannot do the loan, or change the terms at the last minute.  I had one loan source do this recently to one of my clients- and I will have never use them again.  You are right about losing the appraisal money- not to mention time, etc.

When last minute changes are made by the lender and the client's purchase deadline passes- the deposit money is also lost.  Bottom line, low interest rates are easy to get, but the key at the end of the day is can the lender close in time with the original offer.

Francis M. · Answer

I appreciate everyones answers to my question!

Zach Edelman · Answer

Another vote for reviews. Word of mouth is great too if you know of any investors.

Erik Estrada · Answer

I think the most important, is can they close it? Rates, fees, and terms mean nothing if the lender can't perform.

Doug Smith · Answer

The 4th C of Credit..."Closability". Does the lender close deals or string you along while they figure it out? Do they give you a quick no as opposed to a long maybe? There's nothing worse than a lender that is afraid to tell the customer the truth up front and simply tells them what they want to here to get that application. Then, after you've paid for the inspection and the appraisal, the loan is declined for something that the lender had knowledge of all along. Are they a pro or a used car salesperson? That, to me, is how you choose a lender. If they really know their stuff, take the time to explain it to you, are communicative, tell you the truth instead of what you want to hear, and actually bring deals across the finish line...that's your person. No where in that rant did I mention rate.

Darnell Lockett · Answer

Good question @Francis Mabutas. Looks like you got some excellent answers. Do your due diligence with several lenders/brokers.  Keep in mind that not all lenders/brokers specialize in the same types of loans. Some specialize in more traditional loans (FHA, VA, USDA Conventional) and others concentrate in the Non-QM space (DSCR, bank statements and more). Others are more focused on private money loans.

Bobby Feinman · Answer

@Francis Mabutas

Agree with all of the previous comments. One thing to add is to check out reviews/references on a lender, starting with any on this site. I think that will help in your decision making process!

Bobby

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