A Summary of the Advantages and Disadvantages of Loan Sources
Commerical Banks
Advantages – 1. Local and easy to see in person 2. Often have confidence in the area 3. Can have lower points on closing 3. Construction and land loans are available
Disadvantages. – 1. Can have a higher interest rate. 2. Can have a lower loan to value ratio lending ratio. 3. Sometimes have a prepayment penalties. 4. Sometimes shorter terms are available.
Insurance companies
Advantages – Have large amounts of money, cater to big borrowerers, have lower interest rates, will make corporate loans,
Disadvantages – Not usually local to the area, are often highly selective who they work with, loan applications can have a longer processing time.
Reits
Advantages – The advantages are very similar to insurance companies, the loan terms are often more flexible.
Disadvantages – They are often not local, they are generally a short term lender, applicatons often have a longer processing time.
Pension Funds
These have the same advantages and disadvantages as insurance companies.
The seller
Advantages – Usually there is no points in the transaction, often a good rate is available, there is no processing time to worry about, however whether the seller will grant a loan depends on the situation.
Disadvantages – The seller may be limited in the amont he or she ccan can hold.
