Working with Lenders

[Raleigh Anthony Salazar]

Hello BP people!

I have been completing research to get into real estate investing. I was originally looking to buy my first home within this year and then discovered BP, some podcasts, and the house hacking method for a good first step into investing. 

I have been working on my credit to get it up to standards for the past 6 months (working with a credit repair agency through a lender) and I am right on the cusp of 600. I plan on using an FHA loan with a Home buyers DPA program. Along with this, i started putting money away last month for closing costs and repair money for the house, extra money from check and taking odd jobs at my friends bar to put even more away. All the while looking and studying the market.

Today I found a perfect 3 unit property and using the BP calculator it, cash flowing at ~450 a month as is or with some renovations ~700 a month. Great for my area (Pierce County Washington). I have seen a couple of properties pass me up for less cash flow that if i could have jumped on to get my hands on experience I would have.

So to the question: my current lender has identified that they are looking to qualify me for an FHA loan which requires a >580 credit score and 3.5% down. By my research, I have above 580 and plan to use the Home Buyers DPA for the 3.5% so i meet those requirements but they haven't moved me from the credit repair side onto the pre-approval side. In this event, should i look for another lender? I really would like to move on this opportunity and take my investing into the practical side.

Thanks,

Raleigh

[Eric Veronica]

@Raleigh Anthony Salazar I hope you don’t take this the wrong way but you are definitely not in a position where you have a lot of leverage. A lot of lenders will not give you the time of day the second you tell them you score is in the 500’s. The fact that this Loan officer has taken the time and effort to help you fix your credit is really awesome. He is not making a penny for this guidance. Unless the loan officer is a hack I would highly recommend staying loyal to the person who has lent his time and energy. 

Also one other thing I wanted to comment on because a lot of buyers get this confused. If a bank or a lender or a program requires a minimum credit score above 580 then that doesn’t mean once you hit 581 it is smooth sailing. Often times that 580 score is the bare minimum for your application to even be considered.  Credit scores serve a purpose but they can also be flawed and misleading  It is not uncommon to see people with foreclosures or bankruptcies 18 months ago sporting 700 credit scores. 

I guess the point is that this loan officer has shown a commitment. This relationship could be really important as you move forward in your investing career.

Good luck!