what comes first the Lender or the offer?

10 Replies

What kind of purchase are you making?  Lender before deal.  Offhand I can't think of a single benefit to negotiating the deal first.  Understanding your financing can:

1. Help you select deals the fit your needs/financing

2. Help you better negotiate to your situation

3. Prevent you from having to back out several days and a lot of time in because you didn't do your homework before.

@Darryl Jennings If financing is needed, they need a lender first. It's not fair to anyone involved, the buyer included, to be looking at houses they can't afford. If they aren't willing to get preapproved, that buyer...is only a looker. They should keep to open houses until they are ready.

@Darryl Jennings you need to have clear idea where the money is coming from.

Investor financing is quite varied and much different terms and qualifications than home owner financing that most new investors may be familiar with. 

@Darryl Jennings if you are looking at traditional residential financing you can talk to lenders and get a 'loan pre-approval' they will pull your credit and ask for income verification and tell you a ballpark figure that they will loan you. you will get the most favorable terms on this type of loan with lower rates and longer terms. But you can't use these for properties with more than 4 units and you can't have more than 10 (unless you are married).

if you are seeking commercial credit for more than 4 units or because you situation does not permit loans based on debt-to-income, a commercial lender will be able to tell you if you have sufficient assets and relevant experience for them to consider you for a commercial loan. Expect higher (probably variable) rates, and shorter amortization period. Commercial lenders will also pull your credit (on mine they pulled a FICO4 score); they will have you fill out a 'personal financial statement' and it doesn't hurt to have a business plan.

Originally posted by @Darryl Jennings :

@Jill F. You're saying you can't get more than 10 traditional loans unless you are married? Meaning that after 10 you have to seek other funding such as partners or Hard Money?

Oh no, I worded that poorly. If you are married each spouse can finance 10 backed by Fannie. Traditional residential financing is not my area of expertise because we don't have high enough dti (we have no w-2 income) so we have to use commercial loans. The commercial lenders don't have any limit but rates are higher, terms are shorter, however on the upside with a commercial loan you can hold the property in an LLC and have more than 4 units in property.


Lender for a couple of reasons:

1) If you're asking the question I'm guessing you're newer. Speaking to lenders can potentially give you a more realistic idea of how fundable you are/what property price you can afford 

2) They can give you an idea of what you'd be looking at in costs going into closing which sometimes surprises many newer investors.