How To Find the Best Mortgage Broker
Learn the one government regulation that can help you find the best mortgage deal. We’ve talked a lot about choosing the right mortgage broker – and with good reason. As I’ve said before, your broker is the most important member of your power team. You can find hundreds of great deals, but without the financing to make them happen, you’re nowhere.
One of the reasons brokers are better than other mortgage lenders is that they work on 100% commission. They’re hungry. When brokers learn that you’re serious about getting into real estate investing, they’ll be all over you – because one investor can bring eight, 10, 12 deals to the table in a year. Just think about it – that makes you a much better prospect than the typical mortgage customer who buys a new primary residence once every 10 years or so.
That hunger can work in your favor when you’re first selecting a broker for your power team. Make sure each broker you talk with knows that you’re shopping around. They want to build a long-term relationship with you, so they’ll bring their best possible deal to the table.
But don’t stop doing that once you find a broker you’re comfortable with. You’ve got to keep them hungry, so they don’t start taking your deals for granted. Don’t just pick one broker and then send all your deals to him for the next 10 years – keep shopping around. You can have more than one broker on your power team – in fact, I recommend that you end up with at least three brokers that you trust and are comfortable working with. Then when you’ve got a deal brewing, you put it in front of all three of them and ask them to serve up their best.
You may be thinking that involving three brokers will just complicate the process and slow things down. But here’s the beauty of it – the government actually requires that they do this, and do it in a timely fashion. In fact, Uncle Sam has made it unbelievably easy to compare mortgage deals apples to apples.
How Good Faith Estimates Help You Get the Best Mortgage
It’s called a Good Faith Estimate, or GFE. All mortgage providers – lenders, brokers and bankers – are required to complete this HUD form and provide it to a potential customer within 72 hours of receiving your completed application. That means that within three days you can have three competing financing deals in front of you – and all three in the same format, so it’s easy to compare.
Now I have to tell you, each mortgage is different, so even on identical forms you’ll see a lot of differences. But that doesn’t matter- you don’t want to read the GFE line by line. You want to go right to the bottom line, and see how much money you have to bring to the closing table and what your monthly payment would be. That’s what you base your decision on, not all the gobbledygook they lay out in between.
Again, don’t get hung up on the interest rate – lenders try to lure you in with a lower interest rate, meanwhile charging you an extra $3,000 in fees that you have to pay at closing. That just doesn’t add up. Stick to the monthly payment and the up-front money and you’ll be able to pick the best deal out of the bunch every time.
In the beginning, the application process may take a while. But once you do a deal with a broker, he’ll have all your information – your pay stubs, your tax returns – in his files already, and he can put together a GFE at the drop of a hat. Which means you can close deals – and adding to your positive cash flow – in no time.
Our team at California Private Money Lenders has worked with novice investors to seasoned investors in finding the best mortgage for their real estate investment. Give us a call at 707-315-1119 or fill out our Borrower Form or Contact Form and one of private money lending specialists will be in touch promptly to answer your questions and make the mortgage process easy to understand.
Getting Started In Real Estate Investing
It’s a common misconception that you need to have money to make money. Or you need tens of thousands of dollars to invest in real estate. That would be nice. And if you have it great! But if you don’t that’s fine too. Keep in mind, our goal is to generate cash flow quickly. So you don’t need a lot of money to get started. Do you have $1? Seriously, that’s all you may need.
Where to Find the Money
In other cases, you may need more than just a dollar. If you have a home, credit cards, banking relationships – you have access to money. If you were to buy a car, where would you go to get financing? If you were to fix up your house and you need financing where would you go?
Sometimes we make this much more complicated than it really is. Home equity lines of credit, 2nd and 3rd mortgages and advances on credit cards are some of the more common methods to get access to start-up capital. May be not the first choice, but definitely viable options.
Need Financing – Forget Traditional Banks!
Don’t rely on the bank. Remember, we’re looking for run-down, distressed properties and most banks won’t even touch these types of properties. That’s fine.
In many cases, you can use seller financing. This is a favorite strategy of mine in which I put down just 10% or less of the purchase price and seller would hold the financing.
You can also use land contracts, assignments, wrap-around contracts and many other strategies that don’t require you to come up with ALL the money to purchase a property. The key is to understand the circumstances of the seller as well as the market and apply the financing strategy that best fits the deal.
Private Lending Can Be the Key
In the meantime, you’re looking for financing, right? No problem. Even though traditional banks may not be lending as much anymore, there are plenty of hard money lenders who are looking to fund deals. Just check with your local Real Estate Investment Association for a listing or google “hard money lenders” for a list.
In just about all markets – even smaller markets – there are plenty of private lenders available who are looking to get a return on their money. Doctors and lawyers are some of the best sources for private money right now. Offer them a percentage of the profits and show them how you can generate a 20% or 30% return on their investment in a short period of time. They can’t get that same return anywhere else right now!
Need Financing – Build Relationships!
Another terrific way to find capital is to go to your local real estate investment club or association meetings and ask other investors who finances their deals. Find out who the title companies are using to finance their deals. Call the phone numbers on the “bandit signs” on the street corners that advertise “”We Buy Houses”. Ask them who they use to finance their deals.
There’s a ton of cash out there right now. Most of the foreclosures in our area, for example, are being bought by cash buyers. So there are many people who have the funds available, it’s simply a matter of finding them.
A great place to find those buyers is in the courthouse records. By law, buyers of foreclosures must be listed in the public records kept on file in the county or city courthouse. Since many of them are cash buyers, they may be willing to finance your deals – especially if they don’t have to do any work.
Show Me The Money!
Here are some of the best sources of funding we’re finding right now that are perfect for investors who are just starting out:
- Hard money lenders
- Home equity loans or lines of credit
- Private money lenders
- 401(k) plans
- Credit cards
Developing a relationship with a hard money lender before you need them is sound wisdom when venturing into the real estate investment market. We would enjoy answering your questions, give us a call 707-315-1119 or fill out our Borrower’s Form or Contact Form and one of our hard money specialists will be in touch promptly to answer your questions.
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