How to vet a private lender as legit

Question

I was approached via email an offer for private funding. The terms seem too good to be true. 100% financing. 100%LTV.

Loan term 1- 5 years. Option to pay monthly or annually. No prepayment penalty. All funding upfront. Credit score 350.

Funds provided in 1-3 days.

All I would have to bring to the table is the closing costs.

My street senses are telling me that the money I'm bringing for closing costs could be lost if this guy is not legit.

This would be my first deal and I really can't afford to make mistakes.

I've tried looking up his profile on social media and Google.

Rick Pozos · Answer

I would never even think about using someone for a loan who contacts me from email. You have to be CRAZY to give someone your bank info, social and all kinds of personal information to someone you met on the internet!!!!

Deal with someone local who you can visit. See their office. See that they are legit. Makes me shake my head that people are so desperate to get a loan that they will gamble their identity. Meet the people from your local REIA.

Tom S. · Answer

@Keith Ware  it's absolutely a scam.  No lender you've never met is going to provide 100% financing to someone with a 350 credit score.

As others mentioned, reach out to our personal network or go to REIA meetings where you can meet in person.  Or just go to a bank. Banks are still lending fairly aggressively, in my experience.

Good luck!

- Tom

Jay Hinrichs · Answer

virtually anyone contacting you via social media is not real .

private lenders are just that ONLY the ones you meet in person.

Jon Collins · Answer

@Keith W., hi I just ran across your post.  Did you ever have any success finding a private lender?  I also get a lot of emails from people claiming to do private loans.

Keith W. · Answer

There you go! That’s what I was thinking as well. As I’m new in this business, I wasn’t sure if this is how it’s done or not. Thanks for the confirmation.

Keith W. · Answer

I agree with the credit score. How low can you go right?

He stated he use his personal funds to finance. Not sure if a license is still required.

My name is out there on different forums and groups so I’ve been approached by many lenders. For some reason this one gives me a bad feeling. Maybe because it’s an offer you can’t refuse.

He sent an application. I’ll take a look to see if there’s a license # on it.

Thanks for your input.

Aaron K. · Answer

Yeah sounds a bit fishy, I don't even know if a credit score of 350 is possible.  Usually your state will have a licensing requirement for lenders that have a business (ie owner financing is possible without a license but not much else)  Check other similar lenders and see if they have license numbers.

How to vet a private lender as legit

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