Were you denied a loan to purchase a property by a credit union or a bank? Consider borrowing from private money lenders near Sacramento. Private lenders often have more flexible lending criteria, and they may extend credit to borrowers who have been turned down by conventional lenders. Additionally, a private money lender can customize your loan repayment plan to suit your individual requirements. Private money lenders have less stringent underwriting standards and approve loans much faster than banks.
Not all private money lenders are the same. Some may lack the capability to create customized lending solutions. Before evaluating your options, assess your lending needs and then look for a private money lender who is equipped to meet them.
Follow these tips to find a trustworthy private money lender.
Check Lenders’ Reputation
Before borrowing from a private money lender, check their reputation. Visit independent, reliable third-party review sites to read borrower reviews and testimonials. Check the business’s BBB-rating and the county records to get information about the lender. Make sure the lender you’re considering has a valid license and necessary approvals. Find out if the provider’s license was suspended in the past. If so, why?
Ask for Referrals
If someone in your personal or professional circle has used a private money loan in the past, ask them about their borrowing experience and if they’d consider the lender in future. Here are some questions to ask:
- Was the provider and their team courteous and professional?
- Was the lender mindful of your needs?
- Did the private money lender explain all costs to you? Were there any hidden costs?
- On a scale of 1-10, how would you rate the lender’s communication skills? Did they have a plan to ensure seamless communication?
- What were the loan agreement terms and conditions?
Look for a Local Lender
A local lender offers valuable insights and guidance, leveraging their understanding of the city’s real estate market. Local lenders have a strong professional network (may include local inspectors, contractors, appraisers, and real estate agents) and can help you make informed real estate investment decisions. Prefer lenders who have experience and expertise in the specific type of loan you are seeking.
Interest Rates vs Value Proposition
Though interest rate is an important factor to consider when choosing a private money lender, do not base your decision solely on it. Some private money loans may have seemingly attractive terms but before borrowing from a lender, assess their professionalism, expertise, and reputation. Try to understand their pricing policy, then decide if they’re the right fit. Check the loan-to-value ratio and consider the loan duration. A lower loan-to-value ratio signifies less risk for the lender and can lead to better lending terms.
Compare Rates and Terms
Do not rush the process of choosing a private money lender near Sacramento. Take your time to evaluate your options. Compare interest rates, loan terms, fees, and other costs from multiple lenders to find the most competitive offer. When evaluating a private money loan offer, do not hesitate to call the lender if you do not understand a loan term or condition. Find out if there are any other costs involved than the ones included in the offer involved. A reliable lender will take the time to answer any questions you may have.
Before signing a private money loan agreement, read the fine print. Make sure you understand the interest rates, repayment schedule, any penalties for late or early repayment, and other terms of the loan. When in doubt, consult a professional.
A reputable private lender should be eager to schedule meetings with you, engage in discussions about your specific requirements, and offer tailored services. Steer clear of any lender who appears indifferent, such as by not responding to your calls or consistently making excuses to avoid meeting you in their office.
Once you have shortlisted lenders, call their offices to make appointments. Your initial consultation with a private money lender in Sacramento is an opportunity to assess their skills and capabilities and understand their lending process.
Here are some questions to ask a lender during your first meeting with them.
- What is the interest rate? Is it fixed or variable?
- How long have you been working in the private lending industry?
- How much can I borrow, and what is the maximum allowed loan-to-value (LTV) ratio?
- Are there any origination fees or other upfront costs associated with the loan?
- Will I make payments monthly or quarterly?
- Is there a prepayment penalty if I want to pay off the loan early?
- Can you provide a detailed breakdown of all the fees and costs associated with my private money loan?
- Can you walk me through the loan application process? How long does it typically take to get approved?
- Can you provide borrower references?
Consider Loan Approval Times
When it comes to real estate transactions, time is money. If you need quick access to funds, look for a lender with a reputation for processing loans swiftly. A thorough assessment of the lending process of the lender you’re considering will help you understand what to expect.
Look for a Flexible Lender
Some private lenders offer more flexibility than traditional financial institutions, especially when it comes to repayment terms or collateral requirements. Find a private lender who can cater to your specific needs.
Check Legal and Regulatory Compliance
To avoid future legal complications, choose a lender that complies with all relevant local and federal laws and regulations.
Altus Capital Group is one of the most trusted private money lenders in Sacramento. Our unparalleled ability to make the lending process as smooth as possible sets us apart from other Sacramento private money lenders. To learn more, call (707) 602-3896.