How to Save Time and Money During the Lending Process

(Originally published as an article within ECCU’s former e-publication, Ministry Banking Today.)

Few resources are more valuable than time and money. Good stewardship of these God-given gifts makes ministries more effective. Here are some tips to save you time and money as you go through the lending process:

Finding a lender and applying for a loan:

  • Start early. It is never too early to engage a lender.
  • Make sure your financial house is in order. If your software doesn’t provide good quality balance sheets and income statements, then consider engaging a CPA.
  • Do not piecemeal the loan application. Provide everything at once to your loan representative.

Underwriting:

  • In addition to solid financial information, provide loan underwriters with access to someone who can answer questions, primarily concerning your church’s financial situation and purpose of the loan.

Processing:

  • Save money by not engaging a commercial appraisal of your property. Your lender cannot use your appraisal. Instead, have your lender engage the appraiser as early in the process as possible.
  • If you have entered into any agreements, leases, first right of refusals, or other contracts, provide the information up front. This will save a lot of time in reviewing and approving the Lenders Title Policy. Also provide your lender with any documents related to your church collateral ahead of time.
  • If your church has purchased a lot of property over the years, order a survey on all your collateral before the loan starts. Unlike appraisals, you can order surveys from local surveyors. Be sure to order the level of surveying required in your state.
  • Read your loan approval letter carefully. Look for conditions that may take time or money to put together. If you’re not sure, ask! The sooner those conditions are met, the sooner your loan can close.
  • Purchasing property? Don’t sign that contract until you have financing in place or you risk losing your deposit or the property.

If you need a construction loan:

  • Nothing will slow down a loan like a bad contractor. Ask your loan representative to recommend reputable contractors.
  • Provide key construction documents early in the process—the construction contract, the contract budget, and a breakdown of costs outside the scope of the contract.
  • Avoid paying closing costs with loan proceeds, if possible. Using cash can postpone the use of loan funds, saving interest expense.
  • To help shape the project scope and budget, obtain an initial estimate from your lender on how much your ministry may qualify to borrow. Once you are ready to apply for the loan, the project scope should be well defined. Changes to the scope of work can result in delays both with the lender and the city building department.
  • Bring as much cash as possible to the project, reducing the amount you need to borrow. Some lender fees and other third party fees, such as title insurance, are based on the loan amount. Smaller loans have lower fees.

For more information on how to best prepare to apply for a loan, check out ECCU’s white paper Financial Statements Matter.

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