1st Investment Property... How should I choose the Lender?

Question

Good morning Everyone,

I’m wanting to see if I would qualify for a second loan and I’m wondering if I should start reaching out to the first lender I went with for my primary residence (CapitolOne) or start reaching out to other smaller companies? I’ve read a few forums regarding Larger Banks vs Smaller Banks but they seem a little out dated so I was wondering if things have changed lately or if there was anything I should be keen to when searching for lenders for my first “Investment” property.

Thanks you all. Have a great remainder of your day!

Ben

Gunnar Sevart · Answer

@Benjamin Blackburn It may not be useful in this scenario, but also think about going the hard money route if you intend on doing rehabs like @George Despotopoulos was hinting towards. While the rates are anywhere from 10%-15% and probably have origination points, this is a great way to close fast and use little of your own capital. You would be exchanging more money for faster closing (could be within a couple days) and less of an approval process.

George Despotopoulos · Answer

Hey @Benjamin Blackburn I agree with @William Murrell. If you still qualify with traditional lenders then local community banks are great as are portfolio lenders. There are also a bunch of online lenders that are basically non-bank mortgage lenders. The fees and rates are a little higher but they qualify you based on the rental property's income or, if you're doing a flip, on the property's value. Rates will be around 7% - 9.5% for rental property loans and 10% - 14% for fix & flips or buy/rehab/refi projects.

Let me know if you have any questions!

Benjamin Blackburn · Answer

Hello there @William Murrell Thank for that solid advice. I'm definitely looking for that personable relationship after dealing with a large corporation like CapOne... Yikes! I will start reaching out and getting the process started to see if I can make this happen. Have a great day man!

William Murrell · Answer

Definitely check the smaller banks. A lot of them can be portfolio lenders, meaning they originate the loan and then keep it rather than packaging it up and reselling it. This translates to easier underwriting standards because they don't have to make it perfectly fit inside one box to be resold. They might also be a lot more willing to continue lending once you've gotten your "max" number of mortgages. And lastly, the customer service and relationships that you get at a smaller bank or credit union can't be touched by the large banks. They are a lot more likely to work with you as a person and not just reduce you to a number.

1st Investment Property... How should I choose the Lender?

1st Investment Property... How should I choose the Lender?

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