One Thing Investors Overlook When Comparing Loan Options

Private Lending & Conventional Mortgage Advice

One Thing Investors Overlook When Comparing Loan Options

Real Estate Broker · Member since 2025 · 196 posts · 79 votes

Something I see often when talking with investors:
Most compare interest rates… but forget to compare speed.

A slightly lower rate doesn’t help much if it means you lose the deal to someone who can close in 10 days.

When evaluating lending options, speed can make just as big an impact on returns as the rate itself — especially with Fix & Flips, BRRRRs, and bridge scenarios.

Curious what others prioritize:
• Rate?
• LTV?
• Speed?
• Term length?
• Rehab structure?

What’s the deciding factor for you?

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Clayton Silva

Lender · CA · Member since 2018 · 638 posts · 393 votes

10mo

Biggest thing I see is consumers not understanding the difference between the interest rate and the cost of the interest rate. Clients come to me all the time saying they got a 5.75% when I offered them a 6%. I ask to see a copy of the locked loan estimate and they are getting a 5.75% for 3 points when I was offering a 6% for 1 point. I could easily offer a 5.75% for a lot less than 3 points but they get laser focused on the rate they miss all the junk fees, and broker fees, and origination charges, and points.

To your point though, speed is important, but even more important than that, to me, is actual ability to close. Too often clients go to the lowest rate or lowest fee, and a 4% rate on paper is only as good as the LO's ability to actually close the loan. I see it all the time, because the call center lenders that offer that usually have a relatively poor pull through rate, they just try to get as many people through the door as they can, but a good LO should be finding the hurdles up front, understanding the client's goals and overall picture, and offering them rates and terms that they can actually deliver on.

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Mike GrudzienPro Member
Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
10mo
All those factors work together. But I agree that speed helps.
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Clayton Silva
Lender · CA · Member since 2018 · 638 posts · 393 votes
10mo
Biggest thing I see is consumers not understanding the difference between the interest rate and the cost of the interest rate. Clients come to me all the time saying they got a 5.75% when I offered them a 6%. I ask to see a copy of the locked loan estimate and they are getting a 5.75% for 3 points when I was offering a 6% for 1 point. I could easily offer a 5.75% for a lot less than 3 points but they get laser focused on the rate they miss all the junk fees, and broker fees, and origination charges, and points.
To your point though, speed is important, but even more important than that, to me, is actual ability to close. Too often clients go to the lowest rate or lowest fee, and a 4% rate on paper is only as good as the LO's ability to actually close the loan. I see it all the time, because the call center lenders that offer that usually have a relatively poor pull through rate, they just try to get as many people through the door as they can, but a good LO should be finding the hurdles up front, understanding the client's goals and overall picture, and offering them rates and terms that they can actually deliver on.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
10mo
Quote from @Kelly Schroeder:

Something I see often when talking with investors:
Most compare interest rates… but forget to compare speed.

A slightly lower rate doesn’t help much if it means you lose the deal to someone who can close in 10 days.

When evaluating lending options, speed can make just as big an impact on returns as the rate itself — especially with Fix & Flips, BRRRRs, and bridge scenarios.

Curious what others prioritize:
• Rate?
• LTV?
• Speed?
• Term length?
• Rehab structure?

What’s the deciding factor for you?

If you are referring to speed to close, it really depends more on the borrower than the lender to make sure they get all the required documents in. Honestly if a closing is 10 days vs 21 days, in 99% of the time that makes no difference.
Where speed is more important is the borrower completing the rehab. a 3-6 month rehab at 12% is better than it taking a year at 10% not only because of interest but all other carrying costs.
In reality though, most only look at rate because they do not know how to calculate the full cost of the loan.
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Leona Du
Member since 2025 · 15 posts · 6 votes
10mo
Most of our clients lean toward speed. They tell me the rate and structure matter, but being able to move fast is usually what wins them the deal in the first place. Once the property is secured, everything else becomes a lot easier to sort out. Curious to hear what others are seeing too.
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