Loan Officers: Private Lender vs. Bank



When financing real estate, borrowers soon discover they have more options than they perhaps originally thought. They must decide how much money to put down as well as pick out the right loan program. Once the loan program is decided upon the borrower then decides which rate is best for their particular situation. And we haven’t even touched on the property itself. Borrowers must decide not only where they want to live but what type of property they want to purchase. But before any of that, borrowers must decide where they want to get their loan from, a bank or a private lender. What are the differences? Is a loan officer at a bank the same as a loan officer at a private lender?

Typically at a retail bank, the bank down the street or downtown, the loan officer is there to accept the loan application and document the loan file. The loan officer has a list of loan programs the bank offers and reviews them with the applicant. Once the loan application has been submitted, the loan officer then turns the loan file over to corporate underwriting, most often at another site and usually in another city at a central underwriting center.

A loan officer working with a private lender provides the same services but takes it a bit further. A bank is restricted to the types of loans it provides as well as the nature of the borrower. A private lender can take a more holistic approach and craft a loan program around both the characteristics of the borrower as well as the property type. Banks rarely have such flexibility.

For someone trying to buy and refinance a sort of “outside the box” property that doesn’t fit in the bank’s rigid guidelines, it’s the private lender who can step in and approve a loan application that might not get to that point at a bank. Loan officers at a private lender work closely with their clients from start to finish and there is no hand-off to a corporate underwriting center and establish a working relationship.

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