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Bank Descriptions

Bank Descriptions

When it comes to buying real estate, we need access to capital. Traditionally, if someone wants to buy a property; they will usually contact their real estate agent, get a pre-approval letter from a mortgage broker, find the house, go through the finance process, put somewhere between 3% and 30% down, and they will finance the remaining percentage with a bank. Typically, a national bank like Chase, Wells Fargo, Bank of America, etc.

In reality, there are many ways to buy a property, a lot of times without having to go through the finance process, but even when you do, there are many bank funding sources that people sometimes bypass because they just do not understand the difference. So, what are the characteristics of each?

  • National Banks:a for profit institution, with more locations and banking options, sometimes has more resources, generally higher fees and stricter terms, national qualifying criteria, sometimes greater lending opportunity
  • Community Banks:a for profit institution, offers more personalized customer service local to your community, locally owned and operated, has fewer locations, usually lower fees, more flexible terms, sometimes less lending capability, local decision making
  • Regional Banks:a for profit institution particular to a metropolitan region, sometimes across a few states, a little more expansive than a community bank with higher lending capabilities, but a little less than a national bank with more restrictions
  • Credit Unions:a nonprofit institution, operates like a bank with checking and savings accounts, usually has less requirements for eligibility, tends to have lower fees, more limited products available, and usually fewer locations

There are pros and cons to using each type of lending source. The best way to go about deciding on the type of bank to use is by interviewing them, hearing what their capabilities are, finding a deal and presenting the deal to the institutional options to see what they will do for you to make the deal happen. If you present a deal and none of the institutions bite, chances are it is not a good deal. You will want to go with the institution that provides the best terms for the deal at hand. You may use a national bank for some deals, a credit union for others, and a community bank for another. It all depends on what you are doing with the specific deal at that time.

If you have more questions on how to qualify banks, I encourage you to explore Elite Legacy Education’s mentorship program. The mentors can help you facilitate conversations to qualify banks, lenders, etc. and can provide scripts that can be used when dealing with these institutions.

Areas of Review

Takeaway

Big picture takeaway points

  1. Educate yourself on the different banks and what they have to offer.
  2. Find a deal and present it to a bank.
  3. Over time you will understand the differences between each bank and what they have to offer depending on the property.

Reflection

Self-reflection questions to think more about the content

  1. Do I know the numbers work? If you find an awesome deal and you know the numbers work, a bank should have no problem funding you.
  2. What if no one wants to fund my deal? If none of the banks want to fund your deal it isn't a good deal.
  3. Do I know about the different lenders? Take some time to educate yourself and see what their differences are and what they have to offer you, not just banks, but hard money lenders.

Legacy’s Building Wealth Club offers you the financial education needed to pursue your goals. Let our education and experience lead the way!

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