How many lenders should I send my app to?

Question

I am hoping to get pre-approved here in the next week and I am calling various lenders to see what type of product they offer. I have spoken with a few firms who would structure my first few loans as if they were a traditional lender, and then would offer their portfolio product once I hit a certain limit. I think this sounds like the best product for me, as this is for my first investment and I don’t really need a portfolio lender yet, but might at some point down the line.

My question is, how many lenders should I send my application to? Is there any harm in sending it to 5 or 6 different firms? Is there any reason I should keep that number closer to 2 or 3? Any advice would be appreciated.

Thanks in advance.

My question is, how many lenders should I send my application to? Is there any harm in sending it to 5 or 6 different firms? Is there any reason I should keep that number closer to 2 or 3? Any advice would be appreciated.

Thanks in advance.

Andrew Postell · Answer

@Kerry Baird thanks for reposting that.  I've noticed BP have some more challenging formatting too...but still such a great site for information.

@John Paul Whaley certainly shop.  Absolutely recommended to do so.  And trust your instincts with this stuff too.  If one person is 1% rate but you feel more comfortable with the person who has 1.125% rate....trust your gut.  If the person is more knowledgeable, trustworthy, you just outright like them.  Maybe a small difference isn't that important.  If it STILL is to you...then ask them to match the other person.  Bigger Pockets also has some great state forums too.  Try posting in the state forum you are looking at properties in and see who some good locals use. Might lead you to some good sources as well.  Good luck!

Kerry Baird · Answer

#eyeroll. Crazy formatting.

Kerry Baird · Answer

I pull my own credit and ask several lenders to give me rates based upon the FICO I am presenting them.  No pulling credit at all until we are going to absolutely use that lender.  Call around to local lenders.

@Andrew Postell has a list of questions to ask lenders.  Overlays are complex for this conversation, so search for Andrew and for overlays to learn more.  This will enable you to find lenders that be a good fit and will help you as you grow.  I keep this in an Evernote file, and have called every stinking lender in my local area.

Andrew:

Now it's hard to know what questions to ask to find out what overlays banks have so I compiled a list that does help you find out if they can work with investors:

Questions for Lenders to AVOID Overlays

• 1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
• 2. How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
• 3. What is my minimum down payment required? (if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
• 4. Can I change title to my LLC?
• 5. Do you sell your mortgages?
• 6. What is your loan minimum?
• 7. Can you explain to me what your reserve requirements are?

Sam Horton · Answer

The only thing I would worry with 5 or 6 banks is your credit score at that point, if each bank is doing a hard pull on your credit then that could affect your score. I've been told if you send out the app's in the same week it should count as one pull against credit. You can always ask that they do a soft pull instead of a hard pull as well. My only other question would be are speaking with direct lenders or loan officers? Depending on who you ask there are benefits to both types.

How many lenders should I send my app to?

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