• Are you a direct lender or broker?
• What types of loans do you offer?
• Will you communicate directly with the listing agent on the properties I make offers on?
• Where is the source of the money that you lend?
• Do you have access to down payment assistance programs that I can apply for?
• What information do you need from me in order to determine the best loan for my situation?
• How long does it take you to provide a pre-approval letter?
• Do you offer any rate lock programs?
• Can you provide references from within the BiggerPockets community?
• Can you help me find other real estate professionals?

• Compare rates and terms from multiple lenders on the same day.
• Ensure that you ask your lender about what may change between your initial loan estimate and the final rate and terms.
• If your loan is a private money loan, be very careful to understand exactly what may change while you are under contract on your property and what could cause your financing to fall through. The fewer surprises the better.
• Consider the reliability of your lender in addition to comparing rates. The lender with the lower interest rate may not always be the best lender for you.
• Carefully consider the pros and cons of fixed rate vs adjustable rate mortgages. Do not assume historical interest rates can be used to predict future interest rates.

Note: The actual down payment requirement may differ and depends on a variety of factors including income and credit score.

APR

APR stands for annual percentage rate. It represents the total yearly cost of borrowing money expressed as a percentage of the principal loan amount.

Interest Rate

This is considered the rate of interest on your mortgage note. It is less useful for comparing between lenders because the interest rate does not include fees that are a direct cost of borrowing money.

Points

Points are a one time fee charged by a lender expressed as a percentage of the loan amount. 1 point is 1% of the loan amount. Oftentimes, lenders will offer the opportunity to pay more upfront in the form of mortgage points in exchange for a lower interest rate over the life of your loan. Work with your licensed mortgage originator to carefully examine if this is worth doing based on your unique situation.

Fees

There may be other fees associated with underwriting a loan. It is important to ask your lender to disclose these fees up front.

Note: conventional lenders are required to provide a loan estimate, which discloses their fees. Private money lenders are not held to this standard and receive very little regulatory oversight. As such private money lenders are not recommended for inexperienced investors.

• A direct lender lends their own money. They have more influence over the underwriting process than a broker because they are lending their own money but they are not able to offer as many loan types or shop for the best rate.
• A broker does not lend their own money but instead they connect a borrower with a lender that offers the loan product that they are looking for. They can compare lenders to ensure they are providing the lowest rate and best terms. In exchange they charge a fee for their services.

Note: Some lenders are both direct lenders and brokers. They may lend their own funds for some loans and broker out loans that they cannot fund themselves.

• A private money lender is considered any lender that provides loans from a private individual or company that comes from a private source for investment property loans. Their loans are strictly for non-owner occupied investment properties and they are not limited by the underwriting requirements for conventional loans.
• Hard money lenders are a type of private money lender that underwrites their loans based on the hard asset itself rather than the borrower's qualifications like credit score or income.
• Conventional lenders are the most common type of lender. They offer conventional financing or government agency loans like FHA, and VA.
• All conventional lenders must have a national NMLS number and a state license in the states that they serve. You can search the NMLS license states on the NMLS consumer access website.
• A commercial lender specializes in lending on large commercial income producing properties like retail, office, storage and residential multi-family complexes.