Hello everyone! I am new investor in SC and I am eager to get started with buying my first rental. I thought that I would be a shoe in with getting approved by my bank because of the fact that I have over $150k in sitting in their savings account. My Credit Union recently rejected my application for a $120K loan stating that my median score is 635 and I need a 650. They also said that because my 2nd mortgage is in forbearance (I put it on forbearance because I forgot and wanted to avoid a late payment on my credit...the agent offered due to COVID and I accepted). They told me to try again in six months after my loan was out of forbearance with 6 months of on-time payments and my median score was higher. My question to everyone today is should I just become my own bank? Perhaps I should go out and make a cash offer. I am eager to get started but I can wait if it would be better for me in the long run. Any advice that you all could give me would be great! Thanks in advance.
Kudos for saving up $150K in savings! The bank is rightfully skeptical to lend because even though you have cash sitting in the bank, you chose (even if it was through forgetfulness) not to pay one of your debt obligations.
Based on the property you mentioned wanting a $120K loan, that would be a property of $150K at 20% down. In my opinion, I would not sink all $150K of you savings into one property. If it were me, I would make the on-time payments and get everything back in order before scaling up and trying to buy another property. Set up the mortgages on autopay so it won't happen again and "do your time" waiting 6 months to get back in the good graces of your bank.
Thank you Mason for your advice. I'll probably just wait the 6 months. Take care.