Tips for choosing a mortgage company in Houston, TX?

[Roi C.]

Hi,

I am in the processing of identifying investment deals in the Houston, TX area. I do have enough cash to close on some deals in the areas that I'm looking at, however I want to see what kind of terms I'm able to get by leveraging my money and getting a loan from a mortgage lender.

Can anyone please offer any tips on how to choose the right mortgage company, and any red flags I should stay away from?

Should I look at known national companies, or small local lenders? Or maybe speak directly with banks, or credit unions? Is there any advantage of going with a larger lender vs a smaller one?

Also, if you have any specific lender that you can recommend in Houston, I would appreciate if you can PM me their info.

We have a very good / excellent credit score. My main goal is to check how many mortgages I can get approved for, at what interest rates, and what's the maximum amount of dollars I can use for each mortgage. This will really help me to narrow down my deal-hunting.

Thanks a lot!

[Andrew Postell]

@Roi C. Excellent question here and I wish more people would ask it.  It's a little challenging in the beginning since it's hard to know...what you don't know.  So I'll give you some hints in what to ask about and look for in a lender with investment properties.

First, focus on smaller to mid-sized banks.  it sounds weird but each investment property you own increases your foreclosure rate (there are tons of studies and numbers that support this).  So if I'm a large bank who is publicly traded on the stock market I want low risk loans.  And if that large bank is looking at an investment property loan for you the bank might make it harder to get qualified.  But a smaller or mid-sized bank won't make it harder.  They are just happy to have you!  That's why investors say to go with smaller banks.  They will have more flexible lending.

Second, interview the bank on their investment property tolerance.  Being a smaller doesn't guarantee anything.  Here's what to ask:

• When can I use rental income to qualify? (the answer should be immediate)
• What down payment would I need (15% should be the minimum....if they say 20%...that might be ok, but 15% is better)
• What if the property has no tenant right now? (that shouldn't matter)
• What are your terms? (30 year fixed rate is what you want to have on your first 10 properties)

Notice I didn't say anything about rate.  If the rate is good but you can't use rental income right away, and you need 25% down, and there has to be a renter....then what's the point of the good rate?  Rate is important but the other items are just as important if not more important.

Third, ask for a "Fee Worksheet".  This will show you what the lender charges.  Then you can see rates, payments, etc.  The lender should be able to walk you through what it means.  And if you want to compare with another lender, then you can get another "fee worksheet" from the other lender and compare.

Remember, you are the customer.  Banks should want to work with YOU.  If you have to wait a long time, don't get reponses, things aren't clear...those aren't good signs.  There's 15,000 lenders out there.  Some are good and some aren't so much.  I hope this helps in some way.  Tag me if you have more questions and I will respond. Thanks!