How to choose a loan officer?

Question

I own an investment property outright. I want to take a line or credit out on said property. It is worth $80k. My credit score is 740. I am looking into buying a ~$70k property very soon. It will be my second investment property.

I want to choose the right loan officer. I will be going with US Bank. Do you think it matters which loan officer you talk to? Some are more helpful than others? I have about 12 options for loan officers in my area.

Bill Gulley · Answer

At US Bank, at that loan amount, you're going to get the officer that's not drinking coffee when you go in if you don't have a name to ask for.

Commercial loan officers come in two sizes, those with and without lending approval. Newer officers may need all their loans reviewed, others can make a commitment and they do so at different levels, usually that goes up with experience. Walking in and not knowing individual officers, you can safely assume the oldest guy/gal in there has more experience and probably a higher lending authority.

New customers are also reviewed, a loan officer may have a loan authority of say 250K but being a new customer they may be required to have the loan reviewed by senior officers.

The issue too is that when you start out and you're assigned a loan officer, you'll be stuck with that loan officer, you go into their portfolio much like customers go to the credits of salesmen at a car dealership. You can request another officer, up front is the best time, but doing so later on, IMO, raises some personal issues or it can. Why did you ask for another officer?

The first officer may wonder why and so will the next one. There is a bit of psychology involved, you should have a reason (that will be hard to justify) to switch from one to another. It indicates the first officer isn't doing his job and the next officer may think there are issues that the first one wouldn't cover or deal with and that you're looking for a yes type.

Best thing to do is ask among peers and Realtors for a good loan officer and then request them when you go in. Tell them they were recommended to you but not by who if you can wiggle past that. They may think it could have been one of their best clients and that can play as a bit of a third party influence.

Seeking out a loan officer you want one that's been around, knows lending, makes common sense loans, is personable so that you can build a relationship on a personal level and one that has loan authority.

Starting out, I'd suggest you not just ask for the Sr. V/P of lending, (manager) as they will brush you off to a Jr. officer, hit at an older experienced V/P at lower loan amounts. It's much like going to the car dealer and asking for the owner or sales manager, if you're not a heavy hitter, you'll get pawned off. Who you ask for kind of says something about you, if you're going to ask.

Be personable but business like. Good luck :)

Ty Burns · Answer

@Erik Dwyer - They should be able to use your other income as well as long as you can show that it is steady. It all depends on the broker though. I would try and get an updated statement from your student loan companies to reflect the payment change and give it to your lender for proof. Hope everything works out. If you know anyone in need of a VA loan, I would appreciate the referral. We are nationwide.

Erik D. · Answer

@Ty Burns Thanks Ty, took your advice today.

I talked to Quicken Loans, but their fees were through the roof!

So, I looked for a broker. Found one that will do a 65% cash out loan! I find out tomorrow if it is a for sure deal or not. Wish me luck!

One problem I am having is that much of my income comes from being an independent contractor on audio/video gigs and film production. These jobs do not contribute to my W-2 income.

Another problem is that my student loans are killing my debt to income ratio. So, I called both student loan companies today and had them reduce my payments by 50%. Nice.

I really hope this loan materializes.

Ty Burns · Answer

I would recommend going with a broker. They normally have wholesale rates and can shop your loan around to get you the best deal. I am a licensed LO myself.

Bill Gulley · Answer

Not a big deal. Old saying, it's better to keep your mouth shut and thought a fool than to open it and prove them right. Not saying you were foolish, but it's always okay to let them think you know more than you might. Study, on your next trip in you can easily make up for that. :)

Erik D. · Answer

Thanks @Bill Gulley

I already screwed up then haha, I approached a loan officer without really knowing what I wanted. Oh well.

Bill Gulley · Answer

Michael, that's inaccurate on all counts, with low rates now a new first cash out is probably the best way to go. I worked with US Bank as well. Credit is looked at in all lending except HMLs or transactional deals.

Kyle has a good point.

HELOC is Home Equity Line of Credit, no bank does HELOCs on commercial, it's only on residential.

Commercial can secure a commercial line of credit, but small LOCs are usually harder to do as they aren't profitable so an amortized loan might be used.

You need to understand what type of loans are available or applied to the type of property before you go to the bank, not knowing what you're asking for isn't getting off on the right foot, but your call won't likely register with them next week. Start reading, might google commercial loans and read the overviews. Good luck :)

Michael Murray · Answer

US bank is used by mortgage brokers or correspondence. Brokers will try to up sell you into a first mortgage. Those are the brokers you want to stay clear, they have their own interests ahead of yours.  They do have small business loans. Maybe not what you are looking for.

A commercial loan is based on the property income not your personal credit.

Kyle J. · Answer

How about just doing a new mortgage (i.e. cash out refi) on the home you own instead of a HELOC? You could get 75% LTV out to use on the new purchase.

Erik D. · Answer

@Bill Gulley

Thanks Bill, great advice.

US Bank is telling me that they do not do Home Equity Lines of Credit on Investment Properties. Are there other banks that offer this kind of financing? Are there other kind of options that US Bank isn't telling me about?

How to choose a loan officer?

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