Speaking with a mortgage lender

Investor · San Antonio, TX · Member since 2018 · 188 posts · 53 votes

Hey,

I want to get approved for a conventional loan to purchase my first single family investment property. No house hacking just right out own it as an investment.

What advice do you have for speaking with a mortgage lender? What to ask, what to be aware of

Should I speak with multiple mortgage lenders or the few I get good recommendations from I get from other investors?

Thank you for your time

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Devin PetersonBusiness Member
Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
2y
Quote from @Juan David Maldonado:

Hey,
I want to get approved for a conventional loan to purchase my first single family investment property. No house hacking just right out own it as an investment.
What advice do you have for speaking with a mortgage lender? What to ask, what to be aware of
Should I speak with multiple mortgage lenders or the few I get good recommendations from I get from other investors?
Thank you for your time

Hi Juan, I would speak with a mortgage broker who specializes in DSCR loans. They will be able to assist you and evaluate all of your financing options with great detail. Excited to hear that you're so hungry!!!
[email protected]860-538-3672
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
2y
Quote from @Juan David Maldonado:

Hey,
I want to get approved for a conventional loan to purchase my first single family investment property. No house hacking just right out own it as an investment.
What advice do you have for speaking with a mortgage lender? What to ask, what to be aware of
Should I speak with multiple mortgage lenders or the few I get good recommendations from I get from other investors?
Thank you for your time

Hey Juan,

I would start by asking for references. Look at their reviews, previous work completed, and some online look ups. This space is actually pretty small, so word gets around on who is not that great in the business.

Have you purchased a primary residence yet? Will you be able to put 20-25% + closing costs down?

[email protected]818-269-7983
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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
2y
Quote from @Juan David Maldonado:

Hey,
I want to get approved for a conventional loan to purchase my first single family investment property. No house hacking just right out own it as an investment.
What advice do you have for speaking with a mortgage lender? What to ask, what to be aware of
Should I speak with multiple mortgage lenders or the few I get good recommendations from I get from other investors?
Thank you for your time

I would check out BiggerPockets' Find A Lender tool or the list of recommended Mortgage Lenders:
https://www.biggerpockets.com/loans
https://www.biggerpockets.com/business/finder/lenders
[email protected]
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Scott E.
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
2y
You should talk to 3 people to start to get a feel for where you're at

1. MLO at a big bank

2. MLO at a local credit union

3. Broker at a company that specializes in home loans

Present your situation to them and they will guide you through the rest of the conversation. Once you have some prelim offers, come back to the forums for feedback.
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Derek BrickleyBusiness Member
Lender · Ann Arbor, MI · Member since 2021 · 664 posts · 226 votes
2y
Hey Juan!
When speaking with a lender, your rate and fees are always important but beyond that more importantly you may want to ask people you know for references. The investment world is definitely a different niche, so finding an investor friendly lender is huge. Here on BP is a huge resource and although I'm not part of the Lender Finder, you would probably have good luck there or in the forums. Check for their online presence and reputation. If a lender doesn't show up online and has poor reviews, the listing agent for your property will find the same thing when you submit an offer with their preapproval letter. For the lender, it's important to know whether they broker your loan or lend in-house and understanding the pros and cons to both. Brokers may have more flexibility and options for your loan whereas a direct lender will only have their own products. On the other hand, brokers act as a middle-man in the transaction and take a fee for it, so you may find that a broker would have higher fees than the direct lender. Brokers also may have less control over the timeline and structure of the process, since you are not utilizing their underwriters/closers in most cases. Again, pros and cons to both and so you may benefit from speaking with both and weighing the options they offer.
[email protected]734-645-7722
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Jeff Prow
Lender · United States · Member since 2023 · 73 posts · 13 votes
2y
Ask about options, sometimes there are different loans that may be a better fit. Clients often come in looking for a certain loan then look at another option and go with a different type of loan.
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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
2y
@Juan David Maldonado thanks for the post!  Always great to hear from a fellow Texan. You have some good responses above and I want to just reinforce some things here:

1. Acquisition - how are you purchasing your property exactly? If you are buying off market, distressed properties then no DSCR or Conventional type of loan will fit here. If you are buying off the MLS, then traditional financing should be used...but we want to lean on our real estate agent for recommendations first.

2. Referrals - getting referrals is always great. If another investor in your market suggests a good lender, then let's start there.  How do you meet other investors in your market? There's lots of real estate investor groups here in Texas. Some really great ones are in San Antonio. People like @Will Pritchett @Betty Cruz @Robert Finn are all local to you. I even think @John Steffen has a brother in the market. Networking is skill you will need throughout your real estate investment career.
3. Questions? - I wrote a pretty lengthy post on this topic a while back and it's still very relevant. It even has what questions to ask your long term lenders.  You can read that post HERE
I hope all of that makes sense but certainly here to help in any other ways.  Reach out any time.  Thanks!
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Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
2y
@Juan David Maldonado Hi Juan. I actually have worked with a smallish local bank that has about 25 branches over 2 states for almost 30 years. I’ve had many different accounts with them and when it came time to get my first mortgage I kind of did some research and shopped rates online and then contacted my bank. They put me right through to a person I’ve known for years although I’m sure she didn’t remember me but we got the application going and in less than 3 days I had a lower rate locked in than the online search had come up with.
Throughout the process they were super helpful and eager for my business. The whole process went smoothly and the closing went seamlessly.
I’ve since done four more mortgages with this bank and only run into one minor glitch with them and that was when I did my first commercial loan and I used a different person for the process. He didn’t order the appraisal right away trying to save me money if the application wasn’t approved but next time I know to tell him to order it on day 1.
If you bank with any type of a smaller bank I’d recommend trying them. If you don’t bank local to where you want to be investing yet I’d recommend maybe picking a credit union or something similar and putting your rental accounts there to try to get a foot in the door for future loans.
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Carrie Matuga
Lender · Riverside, CA · Member since 2017 · 248 posts · 98 votes
2y
@Juan David Maldonado Impress them by being organized with your information - know your credit score, be prepared to share your liquidity and experience, have your tax files organized, for the property that you are looking at you should know the rent/taxes/insurance so that it is relatively easy to see how it cash flows. Find out how your interest rate changes as your leverage changes. For example, there can be a sizable difference sometimes between say 70% and 75% LTV. If you are looking for DSCR funding as well as conventional options, ask if there are prepayment penalties and what the terms look like at the 1 yr, 3 yr, 5yr basis as it may not make sense to look into a long term loan with longer PPP term.
If you want to talk more, please reach out.
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