Which Bank Should I Choose?

Question

Currently have 2 investment properties. Eager to get more soon.

I've called about 20 banks asking questions about refinancing my primary home to start building a relationship with them and get me in to more properties. Strategy is to cash out refi and take that cash and put it on a down payment for the next investment.

I've narrowed it down to two banks. Both have said they'll give me up to 10 conventional loans. Bank A says after that it'll be 5-1 arms at 30 years Bank B says 5 year balloon loans.

Bank A is very professional and has several branches. The loan officer is the same age as me and I feel like he's understanding what I'm looking to do.

Bank B has 3 branches and seems hungry to make me happy but I also worry they'll go out of business next week. The Loan officer is older and sometimes has to think very hard about my questions.

Any suggestions? What are the befits of either an Arm or a Balloon? Or will I ever even get to that point? If they'll let me refinance all 10 properties in to one loan and give me more conventional loans do I even care arm vs balloon?

Should I look for bank C?

Thanks!

Chris Mason · Answer

Hi @Lucas Carl,

Ignore what they currently offer for >10 financed property scenarios. By the time you reach that point, it'll likely all be different anyways.

Luke Carl · Answer

Yeah I think you're exactly right he's never had anyone ask these questions.

Should I ask him if he'll look at leases to count in my favor or are pretty much all small banks going to be the same?

Chris Mason · Answer

Hi @Lucas Carl,

He said "5 and then the next day he said 10" because that person isn't REI friendly. His bank's guidelines didn't change overnight, he just doesn't work with a lot of REI, so didn't know, and went and asked.

Currently, you can get 10 and wife can get 10, but you each have to qualify for each 100% on your own.

Luke Carl · Answer

So go with he slightly larger company that I get a better one from? At first he told me I could only get 5 conventional then the next day he said they could do 10. Is there a scenario where I can have 10 and wife can have 10 also? Or again.... when I get to that point things will be much different ??

Kerry Baird · Answer

I like 30 year fixed loans for my long-term holds.

That said, with housing values rising over the past few years, I am currently working to refinance my 2012 loans.  When interest rates are rising, as they eventually will, and housing prices falling at some point in the future (and they will, as everything is cyclical)...well, I would not thrilled to be on the wrong side of those ARM and balloon mortgages.  The first 6 mortgages should be relatively easy to get, while the next 4 require 25% down, last time I checked.  And then, you go into specialty products.

If you are actively aiming to pay those off before they adjust or balloon, because you have a plan in place to eliminate the loans via debt-snowball, or have a high salary to pay them off, well, the benefits of ARMs and balloons may be worth it to you.

Which Bank Should I Choose?

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