Evaluating a lender for investment loans

[James De Silva]

Dear Bigger Pockets,

I'm in the process of getting pre-qualified, so I can get out there and start investing. There are many lenders all vying for our business and each have their ups and downs. How do you evaluate the lender you'd use for purchasing.

Here are some of the questions I ask. Hopefully you might also find some of these questions useful.

• Given what I want to borrow, what is the interest rate they can offer. The obvious question.
• What are your average turn around times for approval of a loan and delivery of funds.
• What are the penalties for early pay off. 
• What are the additional costs associated with the loans. For example, yearly account fees.
• Do they do interest-only for X year loans. Note, whilst common in Australia, this seems unheard of here.
• What are the typical closing costs for this lender?
• Where does the lender primary finance and does that broker/bank manager have experience with real estate investors. I want an lender who is familiar with what I'm doing.
• How many properties can I purchase before I have to find an alternative financing mechanism. 4 seems to the limit for the big commerical banks.

So how about you dear fellow investors? What questions do you go for when picking a lender? Do you even go to the big banks or ask the little regional players? (Note, I'm in the Metro Detroit area).