Which lender to use?

Question

We just purchased our SFH last year and want to purchase now an investment property. We had a great experience with the lender we used from a big bank since it was a jumbo loan, very knowledgeable and competitive. My question is... Is it better to use the same lender for the investment property, which would be a much smaller loan, or use a new one? TIA.

Tanner Lewis · Answer

It depends on the lender. Most lenders specialize in one or two products. For example, jumbo loans are going to be lumped in with bank statement loans and other non-QM loan products meant for owner-occupied properties. If you are looking for an investment property, you would be looking for a DSCR or hard money loan, so I would look for those lenders with BiggerPocket's Find a lender tool.

Brokers are another option, but unless they specialize in one or two products, they are throwing darts at a board and hoping it sticks. Red flags to look for are brokers offering both QM and nonQM products, such as VA and FHA loans concurrent with hard money and DSCR.

At the end of the day, it really boils down to if you trust the account executive/loan officer not to misrepresent the terms for the deal. I see a lot of clients come to me with term sheets from other lenders that arbitrarily increase the ARV or credit score, just to bait and hook the borrower into doing business with them, so just be on the lookout for this.

River Sava · Answer

Hi Norma - I am glad you had a great experience. Sometimes it can pay off to use the same lender but it does not hurt to look around for other options. It also depends on what you are looking to do. Different lenders can have different niches. That being said, what type of investment are you looking into?

Bobbie K. · Answer

@Norma Guardado definitely shop around. Different lenders for different situations

Wilson Lau · Answer

@Norma Guardado I am sure your inbox is flooded with invites by now. From my personal experience, each lender has its strengths and weaknesses. I personally use different lenders for different loans (investment loans vs. hard money vs. jumbo loans). Feel free to reach out if you need some referrals.

Mike Paolucci · Answer

Hi @Norma Guardado, I would reach out to several lenders and compare rates/fees.

I'd also suggest reaching out to a local agent in your target investment area - they'll have good referrals to provide you for your lending needs.

Good luck on your investment property search! Let me know if you have any questions.