I hope this would be the valuable discussion, Please share your ideas to consider while choosing a loan plan.
Hi, so this is a really good subject. I’ll float an idea - what if all the costs and rates were the same with every bank - what would your determining factor be? I’ll pose it like this, what if every person looked the same - how would you choose a spouse? It’s a little hokey but there is a lot more than what’s on the surface of a loan. yes, the costs and the rate are important but most banks will match other bank’s offers. So when you interview a lender, ask them about their investor loans, what investors like in their loans, what you should be aware of as an investor, and so forth. THEY should be earning your business more than trying to SELL you on using them. It’s a lot like dating. Will your lending partner listen to your concerns and be truly invested in your well being? If you can find that, then that’s the right bank for you!..as long as they can approve you. Hope this helps!
Certainly, from the bank’s side - risk vs reward. Taking the “Spouse” out of the equation - The bank has to quantify the risk with appraisals of the asset in question and their leveraged position in the deal to determine if the reward (your example has a similar rate of return) is worth assuming. From the borrower’s point of view, if costs and rates are similar - leverage might be a consideration -
one bank may require more skin in the game. Also credibility and ease of process. There are certain lenders I hope never buy servicing on my loans because their processes are awful.
Thanks for this thread guys!! This is exactly what I have been searching for! Thanks for the thoughts. I am trying to get funding for a big project here in Nashville, TN!
My partner and I discuss this often. All things being equal – I look at the following:
Requirements – meaning LTV, leverage factors, down-payment required, etc. One of my former lenders now will only look at deals with 35% down, and while they used to have, say, 8 different types of loans, now they only have 3. They are still licking their wounds from 2008.
Underwriting – speed, turn around time, beginning to end. The ease of the process, don’t keep asking me for things I already sent. If they have strong depth, scope, etc., then they can get through underwriting quicker, more efficiently, more effectively, etc.
Integrity, professionalism, etc. of the lender/firm and person – I don’t want nor do I accept surprises. It’s a one strike and you are out with me. I don’t do bait and switch, hidden fees, BS, etc.
All of our purchases are via an LLC. It was a good several years – and substantial net worth, LOL – before any lender waived the personal guarantee. Then it seemed to be across the board. Then, years later, due to everything we have seen, the personal guarantee requirement came back. I didn’t have a problem with that. It has zero to do with legitimate asset protection, if you run/operate your business the right way. I have a different view on real estate, so a personal guarantee doesn’t bother me.
Today, banks, lenders, etc., have plenty of money. They are deposit rich. While they have tons of money, they are not “giving it away” and have not loosened up the lending attitude since 2008 and the aftermath. They operate within the guidelines that they are allowed, and where they can maneuver, some do and some don’t. I am seeing lenders compete for my business though, and that’s a good sign.
Good thread, thanks for posting.
Some important factors need to consider while applying for a loan:-
Hunt for the best deal
Need or greed?
The Offered Interest Rates:
Chase the best:
Differentiate between “Need” and “Greed”:
Loans come in all different shapes and sizes. Understanding what loan options are available and what lenders need from you, will make it easier to get the money you need. Great tips!
Flexibility would be key from our point of view. Rate and term can be shopped but a lender that has a history of working with their clients in tough times is critical.
Whether it’s workouts or other solutions most borrowers as one time or another need some type of assistance.
The most important thing to do is I think you should firmly consider why you are collecting the loan. I’ve had some not too great experiences with banks (a story for another day). I you don’t absolutely need it , find another way.
Type of loan
Interest rates (fixed or variable?)
Length of loan
Current and projected financial situation
Your first instinct may be to go to your local bank or credit union which can be a great choice. However, you should also consider online lenders. You can find good deals on online loans.
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