Private lender vs bank for fha first property

[Thomas Sehon]

Hello all,

We are looking to apply for our first loan and they’re wondering if it is best to go with a private lender or a bigger bank. And would love to understand anyone’s perspective on the differences or what they tend to prefer or look for.

Thank you in advance!

[Patrick Roberts]

I see in the title that you're asking about FHA. When you say private lender, are you referring to a private individual, or do you mean a nonbank lender, such as a lender that is not a Chase bank or a Wells Fargo?

In general, big banks dont invest a lot in their mortgage arms because they arent all that profitable. As a result, big bank underwriting and lending experiences tend to be horrific. It's not uncommon to hear horror stories about getting into underwriting and losing your deal a week before closing because of incompetence or error. When the market was a little hotter in the recent past, a lot of listing agents in my area would shun or downplay offers that came with financing from credit unions or "too big to fail" banks. 

Correspondent lenders and brokers only do mortgages - that's their entire focus. You will find much better competence and quality. In many cases, you may also find better rates and pricing than big banks. 

One last thing - why FHA?

[Thomas Sehon]

We only have the liquid funds to put 3.5% down for the area we are looking which is why we are thinking FHA.

We are considering sun west mortgage but open to other suggestions.

[Chris Seveney]

Quote from @Thomas Sehon:

Hello all,

We are looking to apply for our first loan and they’re wondering if it is best to go with a private lender or a bigger bank. And would love to understand anyone’s perspective on the differences or what they tend to prefer or look for.

Thank you in advance!

 The term you want to look up is non-bank lenders (not private lenders). Whether you go to a non bank lender or a bank or a credit union depends. This is an instance where possibly using a mortgage broker to shop rates for you would come in handy. 

[Thomas Sehon]

Thank you Chris! Definitely a novice with all of this.

[Patrick Roberts]

Quote from @Thomas Sehon:

We only have the liquid funds to put 3.5% down for the area we are looking which is why we are thinking FHA.

We are considering sun west mortgage but open to other suggestions.

3% down with Conventional is possible in some scenarios. There are also two solid downpayment assistance programs - one for Columbia specifically and one for anywhere in SC. I recommend exploring all your options as FHA has a nasty upfront fee and permanent mortgage insurance. I'm happy to take a look at this for you - just DM me.

[Melvin List]

I would alway throw in a broker when you are shopping. Your might be surprised if you find the right broker the difference in rates and pricing depending on your situation.

[Thomas Sehon]

Quote from @Patrick Roberts:

What can you tell me about the one for all of SC? We are looking at Beaufort. Will this only work for a conventional loan?

Quote from @Thomas Sehon:

We only have the liquid funds to put 3.5% down for the area we are looking which is why we are thinking FHA.

We are considering sun west mortgage but open to other suggestions.

3% down with Conventional is possible in some scenarios. There are also two solid downpayment assistance programs - one for Columbia specifically and one for anywhere in SC. I recommend exploring all your options as FHA has a nasty upfront fee and permanent mortgage insurance. I'm happy to take a look at this for you - just DM me.