Finding the right lender in a difficult financial market can be daunting.
With all the different lenders and loan options, it can be difficult to know which ones to trust and which are best suited for your needs. And the financial market has seen quite a few changes in the last year, further muddying the waters.
Interest rates are finally heading back to normal levels, and the real estate market is expected to improve overall for the foreseeable future.
Fortunately, there are a few things to understand that will ensure you find the right lender in a difficult financial market. These tips will help you identify the best lender for your situation—considering factors such as loan terms, interest rates, fees, and customer service.
With the right lender, you can get the funds you need to finance your property without taking on too much risk.
What to consider when choosing a lender
The first thing to consider when searching for a lender is the type of loan you need.
Different lenders offer different loan types and sometimes specialize in one particular product, so it’s important to ensure the lender specializes in the type of loan you require.
Find a lender who specializes in your loan type
For example, if you’re looking for a loan to buy a car, you’ll want to find a lender specializing in auto loans. The same applies to mortgages, home refinancing, construction loans, fix-and-flip loans, hard money loans, and other types of financing.
What’s your loan scenario?
Compare loan terms and interest rates
Within the American mortgage market, you’ll find hundreds of choices for loan terms and interest rates offered by various lenders. Comparisons are essential to ensure you get the best rate and terms possible.
Make a master list of the major factors you will deal with (rates, fees, etc.) and fill in a simple homemade chart or spreadsheet of each lender’s loan details. This way, you can view your options at a glance.
Although they’re always a part of a mortgage, you’d be surprised how many borrowers fail to consider fees. Some lenders may charge origination fees, prepayment fees, or other fees that can add up over time. Others may not. That’s why it’s important to compare your options.
Make sure you understand exactly what fees you’ll be paying so you can make an informed decision.
Finally, it’s important to consider the customer service the lender offers. Like fees, the customer service experience is also often overlooked. But it can make all the difference when it comes to getting the loan you need.
Research the lender’s customer service team and read customer reviews to better understand their service level. When you reach out to them, note their response time. Do they clarify things you have questions about well enough?
Types of lenders and loan options
With the above criteria in mind, it’s time to start researching different types of lenders. The most common types of lenders include banks, credit unions, online lenders, and private lenders.
Each type of lender offers different loan products.
- Credit unions are similar to conventional lenders like banks but typically offer more competitive interest rates and better customer service.
- Online lenders are a somewhat newer type of lender that offer quick and easy loan applications and fast approval times.
- Individuals or companies are often the types who offer private loans to individuals, typically at higher interest rates than banks or credit unions. However, private lenders may have the flexibility you need for your particular financial situation.
Questions to ask before selecting a mortgage lender
Before you choose a mortgage lender, be sure to ask your candidates the following questions:
- What type of loan do they offer? Fixed-rate, adjustable-rate, bridge loans, owner-occupied, or jumbo mortgages?
- Any fees associated with the loan, such as closing costs, prepayment penalty fees, and origination fees?
- What are their interest rates and how are they calculated?
- Questions about their experience and track record can hint at what their customer service is like. If you’re the first mortgage of the type you choose that they’ve closed recently, they may be a red flag.
- Do they have any special services—perhaps loan products not advertised on their website or a special pilot program?
- What are the loan terms and conditions, such as repayment terms and late fees?
Conducting outside research into potential lenders
Once you’ve pared down your list of potential lenders, it’s time to start conducting research on each one. Customer reviews and the lender’s website can give you an idea of their customer service and reputation.
Read customer reviews to see what other borrowers say about their experience with the lender. This will give you a better understanding of the client experience and help you determine if the lender is the right fit for you.
Additionally, there are a few resources you can use to compare lenders and find the best rates and terms, including:
- Consumer Financial Protection Bureau
- Federal Housing Finance Agency
- Better Business Bureau
- National Credit Union Administration
Negotiating loan terms
Many lenders are willing to negotiate interest rates and loan terms, so it’s important to ask. If there are fees, ask them which, if any, are eligible to be waived.
Negotiating loan terms can help you get the best deal possible and save you money in the long run.
Finding the right lender in any market—conclusion
The relationship you create with your mortgage lender matters.
The ideal lender thinks of you beyond just another transaction but rather as a true investment partner that they want to see succeed.
Not all private lenders, however, are created equally.
Marquee Funding Group is the ethical standard in hard money lending. We strive to be a fully honest, transparent team of loan originators and real estate investors that works hard for our clients.
We specialize in complex or unusual lending scenarios—the kinds of situations that regular lenders won’t even consider.
While hard money loans have a reputation as a “last resort” option for those with poor credit or those with a specific real estate scenario—but that’s no longer the case.
Hard money lending offers services and homebuying opportunities to a wide range of borrowers.
Marquee Funding Group offers the following loan options and benefits:
- Same-day approvals
- Closing in as fast as seven days
- Loan amounts from $50,000 to $20 million
- Loan-to-value up to 70%, deal-specific
- Purchase money loans
- Rate-and-term refinance and cash-out refinance
- Owner-occupied and non-owner-occupied consumer or business purpose loans
- Single-family, multi-family, commercial, industrial, and land loans
- Construction loans, including ground-up, fix-and-flip, fix-and-occupy, and value-add
If you’ve tried to get a mortgage loan with a traditional lender in this uncertain market and were turned away, Marquee Funding Group can help.
Hard money loans will often have higher interest rates than conventional loans, but they’re meant to be shorter-term loans to help you access cash flow immediately, then transition to a more permanent source of financing later.