The cheapest rate doesn’t always mean the cheapest deal.
I’ve been talking with more investors lately who are comparing lenders almost entirely on rate and points.
That makes sense and financing costs matter.
But on a flip or construction project, I’d also be asking:
- How quickly can the lender actually close?
- How does the draw process work?
- How much cash am I bringing to closing?
- How much of the rehab/construction budget is financed?
- What happens if the appraisal comes in lower than expected?
- Does my exit strategy still work once the project is complete?
A slightly better rate doesn’t help much if the lender creates delays, ties up more of your cash, or makes accessing construction funds difficult.
The way I look at it, financing should be analyzed as part of the entire deal, not as a standalone interest rate.
For the investors here: What matters most to you when choosing a lender? Rate, leverage, speed, draws, certainty of closing, or something else?