Evaluating Lenders. What's your take?

Question

Hey there all, going to throw out a bit of a broad/open question today.

Would anyone who has used an online lender would mind sharing their experiences? How did it stack up to other financing mediums you've tried? Some of these have special offerings through BiggerPockets Pro, like Better Mortgage, NBKC Bank, and Conventus. Has anyone found that these discounts make the service worth it? I'm also curious how these online lenders tend to stack up in terms of allowing for growth. Do they tend to limit the loans to certain maximums? Can you only have a few loans out at one time, or do they allow larger volume?

If you think it's best to stay away from these online lenders all together, any suggestions for finding/evaluating lenders in a given market?

I really appreciate any insight into this you guys can offer!

John Warren · Answer

@John Finch my opinion is that rates, closing costs and fees are all relative. The main thing is to have the relationship where your lender is on your side and can close the deal. I have seen too many lenders give people issues in the multifamily 2-4 space. Interest rate does not matter if you can't close! In addition, there is a lot of bait and switching that goes on with interest rate. One place will advertise a fantastic rate, but then switch things around.

I have a guy I use here in the Chicago suburbs. I am loyal to him, and honestly don't shop rate. If I need a loan, I will get the prevailing rate and he will close the deal.

Anthony Wick · Answer

Not "exactly" an answer to your question, but similar. I used a broker for a duplex last year. Got a great rate of 3.75% fixed for 30 years from some company based out of New Jersey. Sounds good. Until you deal with them afterward. So far, in 12 months, they have managed to "forget" to pay my property taxes out of escrow (duplex almost went to auction). And most recently they didn't "notice" I had switched property insurance companies and paid $1,700 out of escrow to the wrong company, which I am still trying to get back. How do you not notice there are two property insurance bills on the same property?! BTW: It's impossible to get anybody on the phone with them, and when I email customer service I get an auto reply that states they will get back to me within 30 days.

So, for my second duplex I bought last year, I went with a recommendation from a local real estate friend. Local bank. Not the best terms. But not bad either. Things have been 100% smooth so far, and that relationship is already being cultivated for another purchase.

Bottom line: I'm not even shopping rates anymore. I shop service. And I found the service I want for the future.

John Finch · Answer

@Vincent Mazzaferro Thanks for sharing! Amerisave wasn't on my radar originally. And I couldn't agree more about lining up your priorities. I'm definitely comfortable paying the price for speed and service/communication. I appreciate the help!

@Anthony Wick Man, I love to hear as many stories as I can about people's experiences with this stuff. Totally agree about prioritizing service. Thanks for sharing your experience!

John Finch · Answer

@John Warren Really good point - it's easy to get 100% focused in on finding the lowest rate, but that doesn't mean anything if you can't secure the deal. Thanks for giving me a bit of perspective!

Vincent Mazzaferro · Answer

@John Finch,

I have used Amerisave, a large online lender.  The rates are fantastic but they are a bit more conservative on the loan product offerings.  They are also a bit slower than a small lender due to the size of the business.  I plan on using them again in the future.  @John Warren is spot on.  Its all about closing and getting the deal done and having the best loan product for your needs.  I have used Josh (the guy John mentions) and he is great.  I will definitely be using him again also.  So I would identify what is most important to you in this transaction (speed, creativity, rate, ect.) and find a lender to give you something that meets your goals.  Feel free to PM me if you need any contacts.

Jerry Padilla · Answer

@John Finch

I would recommend finding a lender that focus on working with investors, as well. You want a loan officer that is familiar with a client owning multiple properties, or multi-family purchases, doing cash out mortgages etc.

Michael Facchini · Answer

Agreed with @John Warren  and most other comments.  There are lots of smoke and mirrors with how lenders can pitch rates/fees, and online lenders might make themselves look more attractive at first than they really are.  If it's a really vanilla situation (large down payment, perfect credit and income, single family primary residence, conforming loan amount, etc.) with no quirks at all and you have plenty of time to close, then perhaps an online lender isn't a bad choice, but any curve balls at all, that online lender won't have the expertise, attention to detail, customized service, or local presence to pull it together and make it an enjoyable experience.  Most often online lenders have "loan officers" that are very green and less capable.

Ruben Rojas · Answer

Currently looking for the same. Just need a good lender who I can connect with. Good service is hard to come by for sure now days

Evaluating Lenders. What's your take?

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