Stupid question, but I will ask: is it better to contact as many as possible banks to get mortgage?

Question

Hi Everyone,

I am seeking to buy my an investment property to achieve positive cash flow, targeting $250k - 300k SFH. As a foreign investor, I can only get 50-60% down, 2/1 ARM 4% mortgage from the lender finances my first purchase.

Shall I contact other small banks to see if they will qualify me for a loan? Will they see me as 2nd home buyer or investment buyer? The difference on down payment and interest rate is huge. My first mortgage is 40% down and 5/1 ARM 3.99%. Will they find out through their credit system that I already have one loan before and disqualify me to the loan?

Thank you all for helping out.

Pilar

Mindy Jensen · Answer

The credit reporting agencies have changed how they view multiple inquiries in a short amount of time - as long as the inquiries are the same type. A bunch of mortgage inquiries within a short span of time are now lumped together as though you are shopping around for the best rate, and only count as one against your credit score.

Multiple credit card inquiries all count as individual inquires, and ding your score more if you are opening up a bunch of accounts in close succession.

John Fredenburg · Answer

I think that, in lieu of shopping at various banks, a trusted mortgage broker is key.  They can do the shopping for you.  I have met some brokers who were not very helpful, but the professional that I've used for my last two transactions is wonderful.  She has been able to find financing when individual banks would not help.  A good broker is also able to come up with options that I may have not necessarily considered.

Bill Gulley · Answer

Pilar, saying a second home means you can't rent it! Not a SFD detached. There can be exceptions to condos professionally managed where you will have less than 6 months in rental services, but they will be hard to find.

As to contacting other lenders, be careful but yes you can certainly shop around. What you don't want is a string of credit inquires that can appear to other lenders as having been turned down from them. One or two others is not a red flag, but 6 can be.

Tell the lender you are shopping! They understand that, be up front, don't make it look like you're applying all over town and put them through processing for you to take a better deal, they won't want to get into games.

Select the lender you want, then tell them again you have been shopping and that you are not seeking any other loans, just with them!!!! This should be in a letter of explanation with your application. They may have to verify that with your other credit inquiries before closing.

Your residency status should be the first question, then go from there.

You won't get a loan commitment without an application, expect to get loan program information and the basic qualification guidelines with current rates and fees, that's what you shop for. Good luck :)

Pilar Jin · Answer

Which range has better chance for cash flow?

I bought 1st investment at $240k, rented to a very good tenant at $2050. so I am happy. This time is different story since the property price goes up quite a bit, but not the rental.

Need your advice which price range to target.

Wayne Brooks · Answer

@Pilar Jin You are considered a "foreign national"?  I assume you have a TIN if you already have one mortgage?  I know HSBC a does foreign national loans, at 70%, but as you said I believe these are only for a "second home", not an investment property.  I'll ask our lender when I get back in the office today, who is local to you too.  SFR's in that price range are hard to get to cash flow, so obviously you need to buy right in order to gain from appreciation.

Pilar Jin · Answer

@Mark Elliot.

Very good point, I do need to keep it in mind!

How can they find my credit report? I don't even have social security number. I would love to see my own report.

Mark Elliott · Answer

hi pilar. seeking out too many banks can be a problem for your credit rating. if you just go into a bank and bring along a copy of your credit report from any of the big 3, and ask about loans, it would be no harm to your credit rating. but if the bank does a hard credit inquiry, too many hard credit inquiries will hurt your credit score. part of the formula they use to establish your credit score does include how many inquiries you have on your credit report. the more people or banks that look into your credit report, the more hard inquiries you will have on that report and the lower your score would be. go to www.annualcreditreport.com and get a copy of the report from all 3 credit bueraus. you can even get your credit score from them but that part will cost money. take these reports into as many banks as possible and talk to them. that way the bank gets to see your credit report in full without actually going into it themselves and lowering your credit score.

Stupid question, but I will ask: is it better to contact as many as possible banks to get mortgage?

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