Investment Property Mortgage Pre-Approvals?

[Justin Strait]

One of the things I've seen when it comes to starting in the REI arena is getting pre-approved for mortgage. In my consult with Rent-to-Retirement, my consultant Adam made the same point.

So as far as investment properties go what strategies do folks use? RTR has a preferred lender but I'm also looking at PenFed as I know they are one of the most competitive out there, but both were asking about loan size, property cost, and expected rent. 

For a pre-approval do most of you just put estimates or find a property and use those numbers? I'm looking at several property options and not sure what strategy to use here.

[Jason Wray]

Justin,

One thing to keep in mind is when deciding to try and get pre-approved with a credit union is they have very strict guide lines and over lays. My best advice is to find a bank/lender who is offering both traditional and Non traditional - Non/QM- portfolio loans. When you buy an investment property you want the approval in hand as most agents or sellers request proof of funds/financing. You also want to know what your Max loan amount is and what the rate/terms will be prior to calculating your cash flow and ROI.

Credit unions also have a Maximum number of properties financed on credit. usually that number is less than the Fannie/Freddie 10 property on credit rule. Which means it already puts you at a disadvantage for buying more than their Max number allowed. They are also not that found of allowing borrowers to close the loan in their LLC or Trust. They have a maximum debt to income DTI ratio lower then most banks/lenders.

Most cases they take the application at the branch but have to submit the loan to a processing center out of state to then have to be shipped to a different office for underwriting.  That means a lot of hands touching the file but not all of those people in the same office able to communicate and keep the process easy and closing in less than 30 days.