Rookie Podcast 114: Rookie Reply: Should I Get Preapproved From Multiple Lenders?

Rookie Podcast 114: Rookie Reply: Should I Get Preapproved From Multiple Lenders?

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Real Estate Rookie Podcast

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This week’s question comes from Roosevelt on the Real Estate Rookie Facebook Group. Roosevelt is asking: I’m currently preapproved with one lender but another lender has a loan option my current one isn’t offering. Can you be preapproved with multiple lenders at once? And are there any issues I could run into with this?

It’s commonplace in the real estate investing world to be preapproved by multiple lenders, that way, you’re never stuck without an option to finance a deal. Many investors also opt to use a mortgage broker that can help shop for loans on your behalf. If you’re worried about your credit score dropping because of preapprovals, try to apply for your loan applications within thirty days so credit bureaus count the multiple hard credit pulls as a singular instance.

Here are some suggestions:

  • Get preapproval from multiple banks (small, local, national, etc.)
  • Apply within the same thirty day period to minimize effects on your credit
  • Use a mortgage broker to save time when applying for loans
  • Ask what the lender has to offer, they may have custom loans for investors
  • And more in the episode…

If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie episode 114. My name is Ashley Kehr. And I’m here with Tony Robinson. Tony, what is going on today?

Tony:
What’s going on with me? The usual, we got a bunch of properties in their contract trying to find some more, but we actually had a pretty funny, we can laugh at it now. It wasn’t funny in the moment, but we had to call the cops on an Airbnb guest earlier this week, two days ago, super sketchy guests. They were supposed to check out at 11, my cleaner showed up at 12. They wouldn’t let my cleaner in. They weren’t opening the door. I’m calling them. They’re not picking up so I let them stay in the property until 1:00. And I think the only reason they left is because I texted them and said, “Hey, I’m calling the police. I’m calling the Sheriff’s department. They’re going to come over here and escort you out.” And then once I sent that, they finally packed out and left, but they completely trashed the place. Luckily nothing was damaged. They broke a small kitchen things, but there was trash everywhere. Literally the sinks and the cabinets were filled with trash.

Ashley:
How long were they there for?

Tony:
They were there for three days. So they checked in on Friday night and they left on Monday. Yeah, it was probably the worst experience we’ve had so far. So we had to deep, clean and bleach the entire place. And it was a mess. But part of what comes with being an Airbnb host, you get a lot of good guests, but every once in a while, there’s those a not so desirable people that come through.

Ashley:
Well let me ask you this. So how does this work? When you have an Airbnb and somebody doesn’t leave, you can call the cops and the cops will escort them out because it’s not a long-term residency? Yeah.

Tony:
Yeah. I called the Sheriff’s department and I let them know the address. They’re like, “Okay, cool. We’ll send somebody over and we’ll help get them out.” Yeah. It was that easy. That was the first time we had to call.

Ashley:
Right. Yeah. Do you know, is there a length of time if someone stays there over a month, you can’t do that or anything like that?

Tony:
I’m almost certain that’s the case, but we don’t allow for bookings that long at any of our properties. So hopefully we never have to run into that issue.

Ashley:
Yeah. Well, I’m so sorry that happened, but.

Tony:
Yeah, so that was my day.

Ashley:
I guess good content. And I learned something that if that happens at my Airbnb, I just call the cops and they will come and take [crosstalk 00:02:15].

Tony:
Kick them out. Yeah. What about you Ashley. What’s going on?

Ashley:
So you guys listened to all our episodes. A while ago, I went to Virginia Beach and my cousin and I let her kids all by hermit crabs. And I went from Virginia Beach to Tennessee and we recorded in there in the hotel room. And while I was recording, as soon as we finished, one of the kids said, “Mom, we lost a hermit crab in the hotel room.” So we found it, whatever, we have hermit crabs. Well, we just went on another road trip with my cousin. We get back to my cousin’s house. The hermit crab is missing out of their cage. We found it, it had gotten out and climbed into a planter that they had up on their mantle or something. Then we get home. And my son tells me that before we left, he caught a toad outside and put the toad in the cage and it is now gone.
So we’ve been looking for this toad forever. And I mean, I don’t really have that much stuff in my house. I looked everywhere under furniture, everything for this toad. And we did not find it. Well, I come in here, I opened my lovely closet door to the podcast studio. And I’m like, “What is that smell?” And there is that toad no longer alive in the corner of my podcast room. I have this furry rug on the floor, snuggled up into the furry rug. Luckily Dave had just come in the door and I was like, “Dave, I need you, can you get this?” I’m like to the kids, “I found the toad.” But yeah, it’s like, I knew for some reason that I was going to be recording a podcast and it was going to jump out at me or something like that, but kind of happened, I guess.

Tony:
Well, exciting things, right? We got crazy crack heads going into our Airbnbs, dead reptiles in your podcasting booth. It’s just all in a day in the life of good podcast host.

Ashley:
So Tony, what is our question today? We found one. This one’s off Facebook, correct?

Tony:
Yes. So this one came from the Real Estate Rookie Facebook group. So again, if you guys are not in that group, you are missing out. It is one of the most active, most engaged real estate Facebook groups that are out there, especially for rookies like yourselves. But today’s question comes from Roosevelt [Scheider 00:04:29]. And Roosevelt’s question is, “Hey guys, I’m currently pre-approved with one lender, but another lender has a loan option that my current one isn’t offering. Can you be pre-approved with multiple lenders at once? And are there any issues I could run into by doing this?” Great question, Roosevelt. What are your thoughts Ash? I’ll let you start first.

Ashley:
Well, I would say that there is no issue. So there is a, Tony is it a 30 day window where you can run your credit. Maybe even 60 days. There’s a window of time where you can have multiple loan officers run your credit and it won’t affect your credit score if you have it within that certain window of time. So as long as you’re in that window, it won’t affect your credit that you’re being pre-approved again. And honestly, having another hard inquiry. If you have really good credit, it’s not going to affect it that much anyways, to bring it down, getting pre-approved. So that’s the only red flag I can really think of, but yes, you can go out and you can shop rates with different loan officers and get pre-approved. And then when you find your property, you can go with the loan officer that first gets back to you right away that you’re ready to close on a house. And also who has the best rate at the time or the best loan package that you’re looking for that will fit that property.

Tony:
Yeah. A preapproval isn’t a contractual obligation in any way to work with that lender. Right. It’s just, and it’s not even the lender saying that you’re 100% approved, right? You can get a pre-approval try and go out and buy a property. And maybe it still doesn’t work out because the specifics of the property. So a preapproval is just a lender saying, “Hey, we’ve taken a quick glance at your credit profile. And we feel that you have credit worthiness to get approved, but potentially up to this amount,” but they can’t come after you if you end up going to some other lender, because hey, we pre-approved you, you got to stay with us for the rest of your life. It’s not that kind of thing, so. Like Ashley said, it’s good to get one, shop around a little bit, and see who can offer the best terms for you.

Ashley:
Yeah. So I just looked it up and it says that it’s typically between 14 to 45 days. And then it varies depending on the credit scoring model that is used, because there’s all the different kinds of, there’s Equifax. There’s, what are some of the other credit reporting agencies?

Tony:
TransUnion.

Ashley:
TransUnion. Yeah. So just watch out for that window and see, just make sure you stay within that window of time. And then you can also ask the loan officer too, but if you have good credit, it shouldn’t affect you that much anyways, if you happen to get two hard inquiries.

Tony:
And I guess one of the things that you can try and leverage also, Roosevelt, is maybe working with a mortgage broker, if you go to one mortgage broker, they’re typically going to shop around for multiple different loan options for you. So you’re still kind of getting the ability to shop around, but you’re only kind of dealing with one person. So just another option. If you’re looking for other ways to make it happen.

Ashley:
Tony, that’s a great point because I don’t think that’s talked about enough. Everyone just says, “Oh, go to small local banks and talk to the loan officer at the bank that you use,” or things like that. And we don’t talk about the mortgage brokers. Have you ever used one?

Tony:
Before we bought our primary residence, we were using a mortgage broker, but since we bought new construction, we ended up going with their lender because there was a bunch of incentives and whatnot. But yeah, we’ve had conversations with them. I feel like you see the mortgage broker play a more active role in the commercial real estate investing space than you do in the single family residential. So no, we haven’t personally closed in a deal with a mortgage broker yet. What about you Ash? Have you guys?

Ashley:
Yeah. I’ve done one deal. And then the house that I own with my sister, she got it through the same guy. And it was a great process full times. And we have different companies that are servicing our loan. The only thing is, is that you got to watch out because there’s even a greater chance. I feel like that your loan is serviced by another company. I just got a letter in the mail that my mortgage was sold to another company and all my online banking is switching for it and things like that, which isn’t a huge deal.
But with that experience, I actually had a mortgage lined up with a small bank. I had been pre-approved for that. And I was going to go and purchase it. Well, the loan officer there waited two weeks before even entering my information into the system. And the seller was waiting for commitment. And so my realtor actually found me, or she has referred a lot of people to this mortgage broker. So I started working with him and it was a super fast turnaround time and worked out great. But it’s a realtor or an insurance agent. You have to see which one can work best for you. You’re not going to be guaranteed success by going with a bank or with going with a mortgage broker.

Tony:
Nope. Roosevelt, hope that answers the question for you. Nice deep dive into the world of getting approved for a loan. But I love these questions because these are the things that a lot of people are thinking, but just haven’t asked anyone yet. Right? In these, this small question might be holding Roosevelt or someone else that’s listening back from getting started because they’re not sure how to handle the situation. So I love we can kind of deep dive some of these rookie questions.

Ashley:
Yeah. And I think a big thing too, is how he found out that there’s another lending option out there is when you are talking with lenders, ask them what they have to offer. Don’t tell them what you think you need, ask them what they can do, tell them what your current situation is and what you’re looking to do. So maybe if you already have a primary residence and you want to buy your first investment property, ask them what the options are and let them present to you because there are different banks that have different kinds of little things that they can do and flexibility and different kind of loan options and packages. So make sure that you’re asking, you’re not just saying, “I want an FHA loan.” Take the opportunity to listen to them to see what they can offer you too.

Tony:
Ashley. That is great advice. So when we found the credit union, there’s actually two banks we found in Louisiana that did the whole fund, the whole purchase and the rehab. And as long as you get it by the right ARV and whatnot. But I wanted to find a third bank that could do the same thing. So I spent the day driving around town, just walking into different banks. And I wasn’t telling them, “Hey, do you have a loan that does this?” I was doing exactly what you said. I was like, “Hey, if I find a property and the purchase price and the rehab are 70 to 75% of the ARV, do you have anything where you can fund all of that?” And a lot of banks said, “No,” and there was one bank, the third bank in Louisiana that said, “Yeah, sure. We can do that.”
It’s like, if you give them this small hole, they have to fit into like, “Hey, I’m looking for this specific loan,” maybe the gears aren’t turning for them. Right. But if you say, “Here’s what I’m trying to accomplish, how can you help me?” I think it opens the conversation up a little bit more so great, great advice, Ash.

Ashley:
Yeah. And I had the kind of the same experience as you. I went to a bank and me and my partner had gotten a property under contract and we didn’t have the money for it. We didn’t know how we were going to pay for it yet, but we were actually closing on-

Tony:
That’s the best kind of deals by the way, right?

Ashley:
Yeah. We were actually closing on a loan on another property at the bank. And so I had brought my BiggerPockets calculator report. And I said to the loan officer, I said, “This is what we’re trying to buy next. We’re not sure what we’re going to do.” And I wasn’t even saying that, what kind of package it lending package do you have for this? He just offered to me. He was like, “Well, if your private money lender, if I can beat his interest rate, I can offer you a 90 day unsecured loan to purchase the property. And then as soon as you close we’ll refinance it and put it into a long-term mortgage,” and that’s what we did. And I never even would have thought to ask for something like that. So yeah, definitely ask to see what’s available out there.

Tony:
Yeah. Bankers can get creative. So give them the flexibility to do that.

Ashley:
Well, thank you guys so much for joining us today for another Rookie Reply. I’m Ashley @wealthfromrentals and he’s Tony @TonyJRobinson. And we will be back on Wednesday with another great guest on the Real Estate Rookie Podcast.

 

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