How to Find a Lender

Today, lenders can be found through a variety of sources. In addition to calling your banking institution, you can find lenders on the internet or through referrals form your REALTOR. We would be happy to suggest lenders we have used successfully, who have proven themselves competitive and capable even with problem properties or challenging credit situations.

Choosing the Right Lender

Interview several lenders to evaluate the following:

• Ability to explain things clearly and return your phone calls promptly

• Competitiveness of interest rates, costs and fees

• Availability of loan programs that suit your individual situation

• Access to local loan approval committee that understands the kind of property you are buying

Choosing the Right Type of Loan

Today there are so many types of loans on the market that it is beyond the scope of this page to list or explain them all. Your lender is the best person to help you select a loan program that suits your needs.

Credit Report

Typically, it costs under $50 to check your credit. With your permission the lender will order a review of your outstanding loans and your repayment history from a third party credit agency.

Application/Processing Fee

This cost, typically a few hundred dollars, is charged to cover the lender’s work to evaluate your ability to repay the loan. Some lenders will credit this back to you upon closing.

What is APR?

The APR, or annual percentage rate, is the sum total of all your borrowing costs expressed as a percentage interest rate charged on the loan balance.

Indexes

The interest rates on variable loans re-adjust periodically based on changes in an index. Typical indexes include the Federal Funds Rate and Treasury Bill.

Points

When mortgage companies are competing by offering lower interest rates, they may charge you a one-time pre-paid interest payment calculated as a percentage of the loan. Called points, this may range from 0.25% to 2& of the loan balance, and is usually paid up front at the closing. Points are tax-deductible (consult with your tax advisor).

Appraisal Cost

Lenders hire experienced, often independent appraisers to evaluate the property’s purchase price, condition and size compared to similar recent neighborhood sales. This helps ensure the purchase price is not too high and gives the lender more confidence in getting repaid. The appraisal costs vary depending on the property, type of appraisal and region.

Miscellaneous Fees

Expect to see various charges incurred in the processing of your loan which might include notary, courier and county recording fees.

PrePayment Penalties

These vary widely, so be sure you know in advance if your lender will charge a penalty if you refinance or sell. Also check the certain period during which the penalties apply.

There are several benefits to going the extra mile and getting a pre-approval letter. First of all, you will know exactly how much real estate you can afford. When you find a property you want to buy, your offer will be in better positioning than someone less prepared. Finally, being pre-approved is more efficient; it reduces the amount of time it will take your lender to fund your loan. Be prepared to provide comprehensive documentation, which the lender may independently verify:

• Job and career status

• Income

• Monthly debt payments

• Cash Available

• Total assets and debts

• 2 Years of W-2 forms from your employer or 2 years of tax returns

• Recent Pay Stubs

• 3 months bank and money market statements

• Brokerage, mutual fund and retirement account statements

• Proof of other income sources

• Credit card statements

• Other Loans

• Drivers’ license or form of ID

• If not US citizen, then copy of your green card or visa

• Copy of any existing mortgage debts