Rates being the FULL STORY?

[Matthew Kwan]

For those who are currently shopping or looking for a loan/lender. Keep in mind that rates does not fully translate everything. Please also make sure how much points or cost you are paying by looking at the Loan Estimate. I see some lenders out there would just pick the "lowest" rate and the client ends up paying more than 1% of the loan amount at their closing costs. 

Key point is "Lowest" rate does not mean the cheapest rate

[Stuart Udis]

@Matthew Kwan I believe it depends on the type of loan. If this is financing for a stabilized property rate carries more importance but rate combined with origination fees, pre-payment penalty and term in which you intend on keeping the loan in place are all considerations which together should help in deciding the best financing option. Loan administration is also a consideration although less important in this scenario. 

If the borrower is seeking a construction loan, I would say loan administration is of utmost importance. Most focus on rate and amount of cash to close but bad loan administration or bad loan administration policies may cause the project to be far more capital intensive if viewed beyond day one of funding. By way of example, a lender may charge retainage, only release soft costs upon C/O, may limit loans to a set number of draws or only allow draws once a certain dollar amount of work has been completed. Each of these could cause the borrower to need more capital during the construction process independent of the cash necessary to close. Beyond these examples which borrower should be aware of pre-funding there’s also the manner in which the lender helps the borrower navigate adversity. This is what separates the best construction lenders from the pack.