Vallejo, CA · Member since 2017 · 35 posts · 15 votes
I am in the process of setting up initial purchase and refinancing lending for BRRRR deals in a new, low priced market (avg. purchase price of around $60,000). I plan on opening balance transfer business credit cards and 0% intro interest credit cards to fund my purchase and rehabs. At the same time, I want to get pre-approved for refinancing before even searching for properties.
I know when applying for a mortgage, opening LOC and receiving hard inquiries during the process may mess up the process and effect how much I can get approved for. However, since I assume I would only need to get approved for at most $150,000 (75% of max assumed ARV of $200k) and I know for certain that I can get approved for at least $300,000, would it even matter if I opened these LOC before, during, or after the pre-approval process?
I am in the process of setting up initial purchase and refinancing lending for BRRRR deals in a new, low priced market (avg. purchase price of around $60,000). I plan on opening balance transfer business credit cards and 0% intro interest credit cards to fund my purchase and rehabs. At the same time, I want to get pre-approved for refinancing before even searching for properties.
I know when applying for a mortgage, opening LOC and receiving hard inquiries during the process may mess up the process and effect how much I can get approved for. However, since I assume I would only need to get approved for at most $150,000 (75% of max assumed ARV of $200k) and I know for certain that I can get approved for at least $300,000, would it even matter if I opened these LOC before, during, or after the pre-approval process?
If you are going to go this route I would make sure the business lines of credit you apply for don't show up as a revolving accounts on your personal credit report. This could impact the amount you get approved for as it will make your debt to income ratio higher. It would also depend on how many cards and lines of credit you are applying for, if its only a couple then you should be fine unless you plan on refinancing really soon after you get the lines of credit.
I am in the process of setting up initial purchase and refinancing lending for BRRRR deals in a new, low priced market (avg. purchase price of around $60,000). I plan on opening balance transfer business credit cards and 0% intro interest credit cards to fund my purchase and rehabs. At the same time, I want to get pre-approved for refinancing before even searching for properties.
I know when applying for a mortgage, opening LOC and receiving hard inquiries during the process may mess up the process and effect how much I can get approved for. However, since I assume I would only need to get approved for at most $150,000 (75% of max assumed ARV of $200k) and I know for certain that I can get approved for at least $300,000, would it even matter if I opened these LOC before, during, or after the pre-approval process?
If you are going to go this route I would make sure the business lines of credit you apply for don't show up as a revolving accounts on your personal credit report. This could impact the amount you get approved for as it will make your debt to income ratio higher. It would also depend on how many cards and lines of credit you are applying for, if its only a couple then you should be fine unless you plan on refinancing really soon after you get the lines of credit.
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Julian Pilate-Hutcherson Talk to your lender to get the best answer... they are a team member and should be considered as a partner for growth. The last thing you want is surprises!
That out of the way, I'd consider waiting until afterwards...
Realtor · Southern NJ · Member since 2017 · 188 posts · 68 votes
6y
I agree with @Joseph A.. The inquiries shouldn't matter too much to a mortage lender, they are looking at FICO and DTI. But Joe is correct that if you have revolving accounts reporting to personal, you need to make sure you manage them a certain way. Ideally get setup with lines of credit that don't report to personal to give you the flexibility that you need.
Vallejo, CA · Member since 2017 · 35 posts · 15 votes
6y
I Googled and found a few banks and business credit cards that specifically do not report to the consumer bureaus. It looks like U.S. Bank has a strong 0% interest business credit card I'm going to look into first.
Realtor · Southern NJ · Member since 2017 · 188 posts · 68 votes
6y
Sure thing. Depending on how much you need, it may be tough to know what banks to target first. If you need any help, let me know, we do this all the time.
Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
6y
@Julian Pilate-Hutcherson Yes, there are quite a few sites that let you know which ones report to personal credit and which don't. Cap One does (and they pull from all three for the hard inquiry) ,Chase does not report.
I personally would wait until after the pro-approval. Hard pulls don't drop your score much, but even a 10-20 change when applying for a mortgage can a big difference if you're in the 680-720 range now.
Realtor · Southern NJ · Member since 2017 · 188 posts · 68 votes
6y
@Tom S.
Actually I recommend the opposite. In the unsecured world inquiries are a big deal, way more important than your credit score actually, where a few inquiries have a negligible effect on your credit score when applying for a mortgage.