{"id":120653,"date":"2019-12-28T14:30:08","date_gmt":"2019-12-28T21:30:08","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=120653"},"modified":"2024-02-24T12:08:34","modified_gmt":"2024-02-24T19:08:34","slug":"real-estate-investing-getting-another-loan","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/real-estate-investing-getting-another-loan","title":{"rendered":"How Long Should You Wait Before Getting Your Next Loan?"},"content":{"rendered":"

How long do you need to wait between securing loans for investment property<\/a>?<\/span><\/p>\n

Well, if you follow the advice in the general media, you should wait six months in between mortgage applications for the credit inquiry to fade away on your credit report before applying for a new loan.<\/span><\/p>\n

If you follow this advice, this means you would only be able to secure two loans a year. <\/span>Not exactly a fast path to building wealth.\u00a0\u00a0<\/span><\/p>\n

So, what is the true answer to this question?<\/span><\/p>\n

Qualifying for Multiple Loans<\/h2>\n

If you are just starting out, most likely you will be using conventional lending to get your first few properties\u2014and <\/span>not all conventional lenders work (well) with investors.<\/b><\/p>\n

For this reason, it is worthwhile to find an investor-savvy lender. This type of lender <\/span>truly understands what you are trying to do<\/b>, which is to use leverage to build your wealth. Also, they make money by lending people like you money.\u00a0\u00a0<\/span><\/p>\n

It’s a win-win!<\/p>\n

\"Mortgage<\/p>\n

An investor-savvy lender is on your team. So, it is to your benefit that they are fully aware of your purchasing plan and that you allow them to guide you if there is an issue (i.e., be coachable!).\u00a0\u00a0<\/span><\/p>\n

For me, my lender was (and is) indispensable to my growth. I had my lender on speed dial and would proactively plan initial hard money loans<\/a>, refinances, and the occasional straight purchase. I side-stepped many investing landmines just by having my lender fully involved in my plan.\u00a0<\/span><\/p>\n

Potential Issues & How to Solve Them<\/h2>\n

Problem:<\/b> Having too many loan inquiries in three to six months will negatively impact your FICO score.\u00a0\u00a0<\/span><\/p>\n

What to do: <\/b>First, find an investor-savvy lender. Next, if this is an issue for you, your lender will give you a standard form to mark an explanation for the inquiry, such as \u201cShopped for home\/mortgage history on credit report.\u201d Lenders know that investors shop around and should proactively be asking about your credit inquiries.\u00a0\u00a0<\/span><\/p>\n

Related:<\/em><\/strong> 5 Reasons Your Loan Application Was Denied<\/a><\/em><\/p>\n

Problem:<\/b> When you close an investment property loan<\/a>, your FICO score drops.\u00a0<\/span><\/p>\n

What to do:<\/b> Yes, you will see a temporary drop in your FICO score each time you close a loan. The magic FICO number for optimal financing rates is 740 (this doesn\u2019t mean you should wait until your score is 740 before you invest). However, once you start paying on the loans, your score may actually go up. <\/span>Bonus! <\/b>You can use a site like <\/span>CreditKarma.com<\/span> to keep track of your FICO score.<\/span><\/p>\n

Problem: <\/b>When purchasing or refinancing any property, you may be turned down for a loan even if you have a good, stable job.<\/span><\/p>\n

What to do:<\/b> If you are using conventional lending, you must show stable income, as well as meet two other income-based requirements:\u00a0<\/span><\/p>\n