Selecting a lender can be a difficult process if you don’t know the right questions to ask. This article features 5 questions to ask when looking for the lender in FLORIDA who is right for you!
While the process might seem arduous, you must remember that you have the upper hand. There are a variety of lending options available, and in theory, these lenders are competing to have you as a customer.
As an investor looking for a lender, your process might be different than someone looking for a traditional mortgage of a home they plan to reside in. Here are a few great questions to help you in your search.
What are Your Terms, and Are There Additional Fees?
Naturally, you’ll want to inquire about the interest rate, the Loan to Value (LTV) ratio, and the points you’ll need to pay. Additionally, it’s advisable to inquire about any potential additional fees, such as legal fees, underwriting fees, administrative fees, and so forth.
These fees can greatly impact your profits if they are not accounted for from the beginning. Make sure you are of any prepayment penalties you might be charged as well.
Do You Have Property Criteria That Must Be Met?
Geographic boundaries, as well as limitations on the type of property you are able to purchase, might be put in place by the lender. Make sure you fully understand what types of properties the lender will allow you to buy.
If you are looking for a two bedroom, fix and flip, but the lender requires 3 bedrooms and a price point of 250k+, you might be out of luck.
Do You Provide Funds For Rehab?
In many cases, a real estate investor will need to make some repairs. Will you have to pay for this out of pocket? Or will your lender provide funds for rehab and upgrades?
This is important to know when you are looking at potential properties for investment. While the ability to borrow more money to fix up the home might seem appealing, make sure the value is there as you will be paying additional interest on these funds.
Does Your Company Flip The Loans After They Are Originated?
Several companies opt to sell the loan to a third party after its origination. This implies that there’s a chance you might end up dealing with an unspecified third party. In the event of loan flipping, you may find yourself making payments and interacting with a different company once your loan has been processed.
What is Your Experience With Loans Like This?
Those familiar with your actions and recognize the favorable terms you’re securing are inclined to offer you better conditions. They perceive the loan as low risk and can assist you in optimizing your profits.
As with any decision in real estate, it important to know all of your options and shop around. Remember to ask questions about ANYTHING you are uncertain about.