Providence, RI · Member since 2017 · 23 posts · 8 votes
Hi Bigger Pockets Community,
I am brand new to real estate, and am in the process of buying my first, 3 family property in the Providence, RI area. I am a mechanical engineer, employed full time, with excellent credit score, so I'm thinking a low down payment FHA loan is a good option.
I started to work with lending tree, prime lending, bank of America, homestar, and someone my buying agent recommended. My home inspection was completed over the weekend, and I'm getting close to needing to secure financing.
What is the best approach to getting financing? Is FHA the best option? Is there a way I can forgo paying the PMI? Any recommendations on a particular person to work with, keep shopping around, or just stick with the guy my buying agent recommended?
Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
9y
@Jennifer Cheu - I would strongly recommend you stay away from Lending Tree, Quicken, or any online lender. They typically do a very poor job properly structuring the loans, calculating income, etc.
Without a thorough review of your income, assets, debt-to-income, etc., we (lenders here on BP) wouldn't be able to recommend one loan over another. However FHA is the only loan that allows a down payment of 3.5% on a 3-unit property. There is no way to forego PMI unless you put 20% down. On an FHA loan, PMI is for the life of the loan, so when you hit 20% equity, you may want to refinance into a conventional loan.
Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
9y
@Jennifer Cheu - I would strongly recommend you stay away from Lending Tree, Quicken, or any online lender. They typically do a very poor job properly structuring the loans, calculating income, etc.
Without a thorough review of your income, assets, debt-to-income, etc., we (lenders here on BP) wouldn't be able to recommend one loan over another. However FHA is the only loan that allows a down payment of 3.5% on a 3-unit property. There is no way to forego PMI unless you put 20% down. On an FHA loan, PMI is for the life of the loan, so when you hit 20% equity, you may want to refinance into a conventional loan.
I would recommend Guaranteed Rate. I am also in the process of purchasing my first, 4-unit property and they have been great so far. I was able to lock in at 3.75% and they had a $3,000 credit for closing costs!
Thanks for the advice! How do I tell if a loan is structured properly? What are things I should look for besides the interest rate, which I expect to be around 4%. I asked to meet with the local lender who was highly recommended by my buying agent, but since I am only available after 6pm or on weekends, he suggested we do the transaction through email. Is this a red flag?? or typical to the industry?
Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
9y
I can't really tell you how to tell if the loan is properly structured because there are too many issues that could trip up a file. Ultimately what I'm suggesting is that their Loan Officers / Underwriters at online lenders are notoriously bad at identifying whether someone adheres to loan (in this case FHA) guidelines in regards to income, assets, credit, property condition, etc. until it's way too late and closing is almost upon you. Truthfully, this is one of those times you have to rely on an expert, such as a quality loan officer. If your agent trusts this person, then you should as well.
No, doing the transaction via email is not a red flag. It's more common among more seasoned and experienced Loan Officers. I would suggest that if you're serious about getting a mortgage, ask him/her what documents you'll need to provide, gather them up, and sit in his/her office for an hour or two during business hours to go through everything. It will be much more efficient than the back-and-forth that will inevitably occur via email.
My mortgage commitment date was 8/15 and we had to extend this back until 8/21 but more so because the appraisal report was sent in late and there was some last minute issues between FHA and Insurance.
Outside of that, we are still on pace to close this Friday 8/25 and I have no complaints with them at all. They have communicated with me every step of the way, if I had a question/concern they replied within a few hours. I would recommend giving them a shot.