How do I choose the best lender? - Thriving in Grand Junction

In a dynamic market of lender choices, how do you know which one will be the right one for you?

To choose the best lender for your investment purchase is one of the critical keys to success!

When you’re looking to purchase a home, the extensive world of lending can quickly get overwhelming. There are lenders everywhere, and you may be wondering which one is best for you during this transaction.

In a nutshell, I recommend choosing a local lender who knows your market, provides a competitive rate, and can stay on a contract timeline (usually this means acting quickly). Other factors to consider are the type of loan(s) the lender can offer and special incentives that will sweeten the deal.

We all work hard.

We work hard for our money, how to balance our time, and how to make progress to give us an edge in the rat race.

So, when a client comes to me to start a conversation about real estate investing, it is always SO exciting. They have financial goals, hopes, dreams and a twinkle in their eyes. And rightly so. They’re getting ready to level up, and they want to talk about houses.

The first question I ask: Have you chosen a lender yet?

The answer I often get: The distinctive chirping sound of crickets.

I don’t mean to catch my clients off guard, and it’s an easy step to miss when there’s shiny houses out there just waiting to be explored.

The best way to set yourself up for success when you’re getting ready to invest (or think about buying a home for yourself), is to start by choosing the best lender for you and your purchase.

Lenders have guidelines that they have to follow according to law, but depending on their financial institution, they may have different incentive programs for various types of purchases. If you’re looking for an investment property, you should focus on investment-related questions.

Here’s a quick guide to get you started on some questions to ask a lender when you’re looking for an investment property.

How much money do I need to put down for an investment property? Usually, this is somewhere between 25-35% of the purchase price, a sizable increase for a primary residence. But, this amount will vary per lender, so it’s important to know how much cash you’ll need to bring to the table.

What is the interest rate on investment properties? Unlike a primary residence (the home you’re going to live in), loans on investment properties usually come at a higher interest rate.

Length of the loan- Does the lender offer different loan lengths that may offset cost or pay down principal sooner? Typically, the shorter the loan, the higher the monthly payment but the less you’ll pay in interest.

DSCR or other non-standard loans– Debt Service Coverage Ratio loans (DSCR) loans are specific to investing. The skinny is that the loan is based on the income potential of the property being purchased instead of the qualifying capacity of the borrower. In other words, if the house looks like it will make money, it may qualify for a DSCR loan.

Incentives– What else can the lender offer? Are they giving cash back, a percentage towards closing costs, an opportunity to refinance within a timeframe without closing costs, percentage buy downs? All of these incentives can really add up to keep money in your pocket from the get go.

Need a list of local lenders to interview?

I have a great list of trusted lender partners that I’m ready to share.

Alanna Spees, REALTOR®
Text/Call: (408) 497-3774
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Check out my other articles on buying a home.