Mortgages & Creative Financing

A Review of SoFi: The Finance Company Upending Residential Lending

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Kerry Baird is an Air Force veteran with 10 years of service. Over the course of different military assignments in England, Arizona, Texas, and Florida, she has invested in 31 single-family properties. Kerry’s mission statement is “Improving my country, one house at a time!”

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Upending a tired process can produce amazing outcomes. For example, in England, where I lived for 16 years, Highways Traffic Officers drive conspicuous brightly colored vehicles. My paradigm from my youth was: Traffic police drive dark-colored police cars and lurk in speed traps to ensnare the unwary. In the United Kingdom, traffic cameras perform the onerous task of catching speeders, who receive a ticket a few days later in the post. Meanwhile, England’s friendly Traffic Officers perform helpful tasks, such as assisting with disabled vehicles or removing road debris, thus improving safety. The upended process has positively improved public perception of Traffic Officers.

Another example of upending a tired process is demonstrated by my uncle Rick, a dentist. Rick was the first in his family to go to college, and since, he has built the largest dental franchise in America. He upended the dental industry in several steps, through what he calls his “lean and mean” dental practice management. He trains his staff in-house, making the process cost-effective and systematic. Rick advertises the tongue-in-cheek slogan, “We cater to cowards!”—something that most of the customers who visit his clinics find relatable. Upon entering one of these dental franchises, instead of an initial visit with a technician, the customer is greeted by the dentist, a move that puts the customer first. His low overhead and creative business model has upended the dental industry.

Somewhat similarly, Social Finance, also known as SoFi, advertised in a Super Bowl ad, "We make great loans to great people." Interpreted by some to mean that SoFi only caters to those in a place of privilege, the company responded in a blog post, "When we say our members are ‘great', we're not talking about their net worth. We consider factors like strong employment history, a track record of responsibly handling debt and, in the case of student loan products, a degree from an accredited undergraduate or grad program–things that indicate you're a hard worker who's invested in your own financial wellbeing. Because if you're invested, then chances are we want to be, too."

SoFi Process

SoFi allows prospective customers to apply online only. This lean front-end reduces overall costs and results in a speedy, two-minute pre-qualification. You’ll need to simply enter your personal information, such as name, address, and phone number.

I was surprised to discover the next screen asked for my undergraduate school and degree program, as well as the date I last attended. A graduate school and degree program may be added. Employment information expands the applicant’s profile to include years of work experience.

I was pleased with the transparency I saw as I made my way through the various screens and saw notifications that I was still on the “soft pull” aspect of the site. I could determine if I was pre-qualified or not, without experiencing a “hard pull” and without submitting a mountain of documentation.

SoFi needs a bit more information to get pre-approved. I expounded with income to include my rental property and other assets, such as brokerage or retirement accounts. There were a number of declarations such as, “Are you a party to a lawsuit?” or “Have you declared bankruptcy within the past seven years?”

SoFi Product

I was directed to choose between a 15-year fixed, a 30-year fixed, or a 7/1 adjustable rate mortgage. Once I selected a mortgage option, I was informed that a hard pull to the credit was necessary to continue.

Also important to note: There is no origination fee! The already low interest rate is even lower when the borrower agrees to use AutoPay.

It is possible to defer payments if you lose your job, and SoFi even helps you with finding new employment!

SoFi Person

Here's where the rubber hits the road: SoFi weighs various degree programs on a scale, with the potential for future earnings contributing to the underwriting picture. Lawyers, MBAs, or newly-minted physicians have very high earning potential, which tips the balance in their favor with this lender, even if that person is a recent graduate or has student loans.

The typical borrower is 25 to 45 years old, is a college graduate, and has four open credit lines. The average credit score is 700.

In my interview with a SoFi representative for this article, I discovered that SoFi also makes allowances for those who have recently graduated. When applying with a different lender, I was asked to verify at least two years of employment. Contrary to that experience, a newly hired engineer who can demonstrate history in engineering school followed by solid employment may still be funded.

FICO must be pristine. Debt-to-income must be low. Cash flow must be high.

SoFi Property

I discovered that SoFi is able to secure mortgages against primary residences with as little as 10% down payment and no PMI. Second homes as well as investment properties are eligible for financing.

SoFi Personal

Yes, I found another P to use: Personal. SoFi offers member benefits, such as rate discounts on their other products. What other lender offers career coaching, community events, and unemployment protection? No-cost financial advisors and their Entrepreneur Program round out the unusual aspects of this lender. You can check out the variety of offerings here.

While Social Finance has upended the lending space with a simple process, a low cost product—meant for a “great” person, on a solid property—I’ve got a confession to make.

I went through the process and found it delightful compared to other financing experiences. But I was turned down. Turns out it takes not just a good prospect, but rather a great prospect to get a loan from SoFi.

To learn more about how to borrow between $5k-$100k with SoFi, click here.

Have you used SoFi (or applied) before? What was your experience?

Leave a comment below!

Kerry Baird is an Air Force veteran with 10 years of service. Over the course of different military assignments in England, Arizona, Texas and Florida, she has invested in 31 single family propert...
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    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied over 2 years ago
    Everything is moving more and more in this online direction so it’s no surprise real estate financing is as well
    Steve Vaughan Rental Property Investor from East Wenatchee, WA
    Replied over 2 years ago
    Thank you for the review , Kerry. Being a natural skeptic, I just assumed they were another lame, high cost lender entering a saturated space. Sound like I was wrong! Do you know if they give a rip about assets when qualifying you? Fannie loans sure don’t. Any insight is appreciated!
    Kerry Baird Rental Property Investor from Melbourne, FL
    Replied over 2 years ago
    The representative I spoke with says that they do. SoFi builds a far different risk profile than other lenders.
    Account Closed Rental Property Investor from Johnstown, PA
    Replied over 2 years ago
    Great article!
    Kerry Baird Rental Property Investor from Melbourne, FL
    Replied over 2 years ago
    Thank you!~
    Andrew Hoelzel from Fort Collins, CO
    Replied over 2 years ago
    I appreciate the article post, but it breaks zero new ground. Everything mentioned above is literally allowable to any client who qualifies for a conventional home loan and which is serviced by Fannie Mae, Freddie Mac, or a similar servicer. Now, as for the rate and fee combination, I can not speak to it. Maybe it is more competitive, maybe not.
    Cody L. Rental Property Investor from San Diego, Ca
    Replied over 2 years ago
    Not true. I can’t refinance my own home. I’ve lived in it for 13 years. Never missed a payment. Own ~50% LTV. Have good credit. I also have a ton of equity from apartments. I still don’t qualify with a typical fannie/freddie program because of my tax returns (such is the life of a real estate investor). If I needed the cash, this program would work for me where Fannie/Freddie would not. The market is ripe for disruption for people who can make smart loans (like mine — 50% LTV, primary residence for 13 years = about as low risk as you can get), while being outside of the box (only looking at tax returns as the ability to pay off a loan)
    Kerry Baird Rental Property Investor from Melbourne, FL
    Replied over 2 years ago
    That’s what I liked, too. I’m high on debt to income while waiting for a reno to sell, and will revisit SoFi. The process was unlike pulling teeth.
    Elvis Vasquez Accountant from Miami, FL
    Replied over 2 years ago
    Question is how much do your closing costs come out to compared to BB&T’s Chip program?
    Kerry Baird Rental Property Investor from Melbourne, FL
    Replied over 2 years ago
    No origination fees on mortgages, to start with. I haven’t looked at BB&T.
    Mindy Zimmerman Investor from Maryville, Illinois
    Replied over 2 years ago
    Thanks for posting this, Kerry. I’m having to start considering alternatives because, like Cody, my tax returns don’t go over well with banks. If SoFi makes a better evaluation of rental income then it might work for me.
    Kerry Baird Rental Property Investor from Melbourne, FL
    Replied over 2 years ago
    The rep I spoke with tells me that SoFi quantifies cash flow as a primary qualifier. Credit score is right up there, though.
    Will Wiggins Military Officer from Pensacola area, FL
    Replied over 2 years ago
    I have successfully received two loans from SoFi at this point. One personal unsecured loan and a student loan ReFi. Rates are better than I was seeing elsewhere, and there were no loan origination fees, points, early pay off penalty, etc. The personal unsecured loan is repaid in full at this point and the student loan ReFi is in funding phase now. I have not looked to get a mortgage from them on a primary residence yet, but very well may in the future. Counter to the article above though, they do NOT currently lend on investment/non-owner occupies units. They DO lend toward primary or second homes (owner occupied). SoFi should send me some free gear for this shameless plug… am I right?!
    Ivan Terrero Investor from Naples, Florida
    Replied over 2 years ago
    Rick Baird…..PDA, or Rick Workman….Heartland?
    Kerry Baird Rental Property Investor from Melbourne, FL
    Replied over 2 years ago
    I’m not sure what you are saying.
    Will Wiggins Military Officer from Pensacola area, FL
    Replied over 2 years ago
    He’s full of shit. Clear enough?
    Dave Chow Investor from KS
    Replied over 2 years ago
    Sofi got lots of negative online reviews. Hesitate to use them.
    Will Wiggins Military Officer from Pensacola area, FL
    Replied over 2 years ago
    Also, my student loan ReFi funded and is now in repayment. SoFi is freakin awesome. Saving me thousands, and they are personable, responsive, and forward thinking. I love ‘em so far. But still, they DO NOT lend on investor properties at this point. Period.
    Isaac Agbolosoo Rental Property Investor from Grosse ile, MI
    Replied about 2 years ago
    I dont think Sofi Lends on investment properties.