Vetting a Lender. How do you do it?

Question

Hello everyone.  What's the vetting process when choosing your lender?  Any investor here found your lender on BP?  Any negative experience working with one on BP?

What should I be looking out for? Do you verify if the(lender or company) license is active or any complaints on the books?  If so how?

Do you work with a 'someone' and follow him/her when they switch company? Do you stay with the original company?

How long should the company have been in the business? Any red flags to look for?

Any advantage for lender to be local?

Are there any one or two 'must ask' questions or 'must know' facts when choosing one?

Appreciate if you can share anything/everything.  Thank you.

Chris Seveney · Answer

First question is are you going to a private lender who may not be licensed or you looking for a traditional lender? There are a significant number of lenders in the space. When a question is asked "what should I be looking for?", the question you need to ask yourself is "what do I need?

I ask that as: are you looking for long term or short term funding. Are you looking for lowest payment possible and maybe an interest only or variable rate (but that has higher risk).

Once you define what it is you need, then you should start speaking with lenders and ask them what types of products they have for what it is you need.

If it is a traditional lender and they are licensed through the nmls (google nmls consumer access to find them), then that means they have been vetted.

Note that most lenders DO NOT keep their loans and they get sold, so age of company is usually not important, experience of originator would be more priority for me

Jon Puente · Answer

Hey Kevin,

You want to look at reviews and reputation (just like buying any product or service).

I would hope that they have an NMLS ID (otherwise they aren't a legitimate lender).

You can stick with the individual LO when they make a move, if you like them, but are not obligated to.

Does not matter about how long the company has been in business.  Wells Fargo has been in business forever and they are atrocious for mortgage lending (just an example).

Local lenders are great for information about the area, but doesn't really matter for rates/costs (the actual numbers).

You are looking for transparency.  How willing are they to walk through different situations to help you save money?  After you talk to them, how good do you feel about working with them?  Trust your gut feeling!!  Numbers matter, but so does service and willingness to answer phone calls when you (the client) has questions.

AJ Exner · Answer

@Kevin Si,

Even the best lenders have their 'moments', so I would even be cautious to this end, but I think its important to go with a lender that complements your strategy in investing. Whether it is BRRRR, buy and hold, wholesaling, etc., working with a group that has good rates, terms, seasoning requirements, FICO minimums, fees, and others that help find groups that help you to achieve what you are looking to achieve.

Good luck!

Jon Puente · Answer

NMLS ID's belong to both the LO and the company.  I personally have my own NMLS ID and so does my company (you can find me and my company online).  If it's a credit union, they are a federal institution so the LO's are not responsible to be individually licensed.  Sounds like he wants credit for the loan by doing it under someone else's name who is licensed.  It's not "normal" per se, but it does happen.

There are a million lenders out there, so why are you continuing to pursue something that you do not feel comfortable with?  That is exactly why I said "Trust your gut feeling" on the original post.  Go with someone else if you are hesitant.  Its your money and your personal information.

Kevin S. · Answer

Thanks Jon.  Does NMLS ID belong to the agent or the lending company?  I talked to an agent recently and after several communications back and forth I decided to look up the NMLS ID.  Turns out there was no NMLS ID attached to his name.  When questioned, he told me he works 'under' someone (another agent of the same lending company). He told me I will be receiving a link under that person's name to fill out the application.  I assume that is normal?  The company is legit and have offices in California and Indiana.  The owner has NMLS in both states.  I am sure if the lending company is big they have many agents working.  Is every agent require to have NMLS ID?

Question is how do I know if the agent is not falsely representing a company before I turn over personal information to him.  Thanks.

Vetting a Lender. How do you do it?

Most Popular Reply

Contact Us