What Should I Look For In A Solid Mortga...

You found a good loan officer with no problems when you bought your residential home. So finding a solid mortgage lender to work with you in your real estate investing business should be a breeze, right?

Actually, the difference is like night and day.

But don’t worry… Cody Sperber to demystify your loan company options and give you all the tips you need to land yourself a solid mortgage lender.

Mortgage Broker or Banker

Let’s begin with a basic understanding of the difference between a mortgage broker and a mortgage banker, since you could choose either one.

Think of the mortgage banker as a direct lender. In other words, this entity is lending you its own money. This is true even though later it may sell the loan to a secondary market.

Now think of the mortgage broker as the middleman. This broker will have contact with a number of lenders and is able to go loan shopping for you. Without a broker, you wouldn’t even know about some of these lenders if they don’t deal directly with the public. Plus, a broker is shopping for the best rates.

So is a banker or a broker going to work best for your particular situation?

Benefits of Bankers

If you use a mortgage banker, you’ll shave off the fees that the middleman charges, and it could make the loan process easier because that banker is able to give you a direct yes or no on your loan application.

When you deal with banks, you’re also dealing with an established company. Compare that to mortgage brokers. Brokers are not licensed, so if problems arise, there is no one you can lodge your complaints to.

Benefits of Brokers

Mortgage brokers often offer a wider range of products than banks because banks can only sell you their own products.

A mortgage broker will make you look good. The broker knows how to put the best spit-and-polish on a loan application, so you don’t have to worry about being rejected because you’re new to the loan app preparation thing.

While the broker does charge a fee, the best ones have an inside track to a wide array of loan programs. Many investors feel the fees are well worth it.

Setting Expectations

You should have a few expectations of your lender, regardless of whether you opt for a banker or a broker.

broker First, your lender should be thoroughly knowledgeable about the current lending programs that are available, as well as any new programs coming up on the horizon. As you begin to work closely with your banker or broker, ask that they keep you in the loop about what’s available.

Second, both the banker and the broker should give full disclosure on any fees that they charge. This will include fees (profits) that they’re going to make on the frontend as well as the backend of your loan.

Lastly, and probably most importantly, your banker or your broker must have prior experience working with real estate investors. You’re a small-business entrepreneur. It takes a smart, savvy and experienced investor-friendly mortgage lender to help you put your best foot forward.

Where to Find Your Lender

Your lender can be crucial to the success of your business, so don’t take the path of least resistance. Do your homework. Ask other investors, ask your favorite Realtor, look through the materials from your local REI club…

Perhaps a broker will have posted an ad in an REI club newsletter or on their website. If they advertise in club media venues, they must be real estate investor savvy.

Once you have a strong, ongoing, working relationship with your lender, you’ll be ever so thankful you took the time to find the best!