If you’re planning to invest in real estate, getting a mortgage is likely going to be part of your strategy. However, not all lenders are created equal, and finding the right one can be a daunting task. In this post, we’ll provide tips for finding a great lender and getting the best mortgage quote for your investment property.
Tips for Finding a Lender
When searching for a lender, your experienced investor-focused real estate agent is probably your best source of referral for lenders. They likely have clients closing on loans regularly and have a queue of lenders that have had good experiences with their clients. Attending local real estate investor meetings and talking to other real estate investors can also be good sources of referrals for finding great lenders.
You can also call multiple banks and/or mortgage brokers, but using a random lender gives you a random chance of closing. It’s important to understand that the lender is not typically a party to the contract, meaning that if the lender you choose does not perform, you (the Buyer) are typically the one in default on the contract.
When calling lenders to get quotes, make sure to call them all on the same day so that you can get a valid comparison. Additionally, avoid having multiple lenders pull your credit score at the same time by telling them what your credit score is estimated to be, so they can still give you a quote without having to pull your credit.
When asking lenders questions, ask about their expertise in putting financing together and what sets them apart from other lenders. You may also want to ask about financing programs for specific strategies, such as the nomad strategy. Finally, keep in mind that rates and fees aren’t everything, and it may be worth paying a premium for a lender who is easier to work with and offers more value.
Evaluating Mortgages and Comparing Lenders
In addition to finding the right lender, it’s important to understand how to evaluate the different mortgage options available to you. In the video above, we will discuss some tips for evaluating mortgages and comparing lenders. We will cover topics such as understanding mortgage interest rates, different types of mortgage loans, and how to compare lenders to find the best deal. Be sure to check out the video for more information on how to make an informed decision when it comes to your mortgage.
Tips for Calling Lenders
When you’re about to get a mortgage on a property, it’s prudent to call around and get quotes from a couple of different lenders because costs and mortgage interest rates can vary. However, to make a valid comparison, you need to do it on the same day. Rates change every day, so you can’t compare Monday’s rates to Tuesday’s rates or Tuesday’s rates to Wednesday’s rates.
Your experienced investor-focused real estate agent is probably your best source of referral for lenders. They have clients closing on loans regularly and probably know some pretty good lenders in their queue of lenders that their investor clients have used and have had good experiences with. Other real estate investors, attending a local real estate investor meeting, and multiple banks or mortgage brokers can also be good sources of referrals.
When calling lenders, ask for rates, but don’t let them pull your credit yet. Only the lender that you eventually choose should pull your credit. If you don’t know your score, have your first lender pull your credit. Then tell the others what your score is, and if you decide to use them, they can pull it then.
Ask questions that are important to you, but don’t interrogate your lender. Ask the most important questions that you have for your lender to get the information you need to make a good comparison. Rates and fees aren’t everything; you may be willing to pay a small premium for someone who is much easier to work with or can add some value in other ways, like helping you improve your credit score.
Before choosing a lender, it’s crucial to find someone you can communicate with easily, who is timely in responding to you, and willing to go the extra mile to help you get approved. It’s not always about minimizing price; you’re paying for the value you receive.
Examples of lender questions include asking about their expertise for putting financing together, what sets them apart from everyone else, and if they know about financing programs for nomads. Tell them about your plan and ask if the requirement for owner-occupied property is living there for a year.
Questions to Ask Your Lender
- What expertise do you offer for putting the financing together? It’s important to understand what sets each lender apart and why they are the best fit for you.
- Do you know specifically about financing programs for Nomads™? Not all lenders are familiar with the Nomad™ strategy, so it’s important to educate them and find one who is willing to work with you.
- What are the current rates for owner-occupant loans? Understanding the current rates will help you make an informed decision and compare lenders.
- How many loans can an investor get in their own name? This is an important question to ask if you plan on purchasing multiple properties in the future.
- What type of documentation will I need to process the loan? Knowing what documentation is required beforehand can save time and prevent delays in the loan process.
- What kind of down payment will I need to buy a property? Understanding the down payment requirement for different loan types and programs can help you plan your finances accordingly.
When asking these questions, it’s important to remember that you don’t want to interrogate your lender. Instead, ask the most important questions and get the information you need to make a good comparison. Don’t just focus on rates and fees; consider other factors such as communication and expertise when choosing a lender. Finally, make sure to call all lenders on the same day to accurately compare rates and costs.
Questions About Fees and Rates
When calling lenders to get mortgage quotes, it’s important to ask the right questions to make an informed decision. Here are some questions to consider asking:
- How do I pay you for your service? Is it a fee on loans that are closed? What is the fee? It’s important to understand how the lender’s fee structure works and how much they charge for their services.
- Is there an up-front fee? Some lenders may require an upfront fee before they start working on your loan.
- Is there a minimum fee percentage and/or dollar amount? If so, what is it? Some lenders may have a minimum fee requirement regardless of the size of your loan.
- What happens if I end up not doing a loan with you? It’s important to know if you’ll be charged a fee if you end up not working with a particular lender.
- Do you have any assistants or staff that work with you that I will be interacting with? It’s important to know who you’ll be communicating with during the loan process and if there are any other team members involved.
- What would I be dealing with you directly on and what would I be dealing with them on? Understanding the role of each team member can help streamline communication and ensure a smooth loan process.
Lender Questions About References
- What percentage of your business is from new clients? What percentage is from repeat business? It’s important to know how much of the lender’s business is from repeat clients versus new clients. A lender with a high percentage of repeat business may indicate they have a good track record and are easy to work with.
- What percentage is referred from existing clients? A high percentage of business referred from existing clients can be a good sign that the lender has a strong reputation for providing good service and delivering on their promises.
- Do you have a few (that means THREE) existing clients that you worked with in the last 6 months (that does not mean friends from high school…you want recent people) that I can call as references? You probably want to get investor/Nomad™ references when possible. References can provide valuable insight into a lender’s quality of service and ability to deliver on their promises.
- I realize that people don’t always agree. If I stumbled upon your most troublesome client, what would be their biggest complaint about your service? WARNING: If they say they’ve never had a problem, they have not had enough clients as problems naturally come up in business. Understanding a lender’s potential weaknesses and shortcomings can help prepare you for any issues that may arise during the loan process.
- Have you worked with any Real Estate Investors/Nomads™ that have invested like I am doing? Can I call them about your service? A lender with experience working with investors and Nomads™ may be better equipped to understand your unique needs and provide customized solutions that fit your investment goals.
When it comes to getting a mortgage, finding the right lender can make all the difference. Referrals from experienced real estate agents and other investors can be a great way to find a lender that has a track record of success.
When calling lenders, make sure to call them all on the same day to get a valid comparison. Additionally, avoid having multiple lenders pull your credit score at the same time by telling them what your credit score is estimated to be.
When evaluating lenders, ask questions about their expertise in putting financing together and what sets them apart from other lenders. You may also want to ask about financing programs for specific strategies, such as the nomad strategy.
It’s important to understand a lender’s fee structure, including any upfront fees, minimum fees, and what happens if you don’t end up closing on the loan. It’s also important to understand who you’ll be working with directly and what their role is in the loan process.
Finally, don’t just focus on rates and fees; consider other factors such as communication and expertise when choosing a lender. Getting a referral can help reduce the risk of being surprised during the loan process.
By following these tips, you can find a great lender that will help you achieve your real estate investment goals.