Getting financing for my first property

[Donald Nnamdi]

Hello All,

I am trying to get financing to buy a 4 unit in the Dallas Fort Worth area using FHA. How do I avoid taking a hit on my credit score when trying to shop around for the best rate I can get. I was told that multiple credit runs in a month will not affect your score but if spread out it will. Is there any truth to this?

[Andrew Postell]

@Donald Nnamdi thanks for posting here.  Also, we do have a pretty active Texas forum if you would ever like to post there.  

When it comes to credit checks and comparing lenders you do actually have a level of protection here with the personal credit agencies.  As long as your inquiries are mortgage related, and happen within a 14 day period, your credit will not be affected.  After the 14 day period, then all the credit checks are combined into 1 inquiry.  That way you can shop at 1000 lenders if you wanted to.  As long as they are all within that 14 day window it will only count against you as 1 inquiry after the 14 day period.  So absolutely shop away!

Now, I would recommend only having your credit checked when you are within 4 months of buying a home.  As mentioned above some places have time limits on your credit and it's usually somewhere between 90-120 days.  After that period you would have to get your credit checked again.

HOWEVER, you should be able to speak with a lender to run some theoretical numbers, WITHOUT checking your credit to get an idea on what you could "afford".  It may not be exact, but it should be pretty close.  That might help some. 

I would also recommend asking some very specific questions when interviewing lenders.  Remember, they need to earn YOUR business....not the other way around.  Here's what I would recommend asking:

Questions for Lenders

1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
2. how long is your closing time?
3. What is my minimum down payment required?
4. Will I qualify for a Downpayment Assistance Program?
5. Do you sell your mortgages?
6. What is your loan minimum?
7. Can you explain to me what your reserve requirements are?

Ask anything else that you would like of course but those are important because you are buying a property that produces income and some lenders may treat that property differently.  And trust your gut with these things.  Don't feel pressured to do anything.  There are plenty of lenders out there and if you don't feel 100% good about that lender, then go somewhere else.  Keep in mind you are about to enter a 30 year relationship with that lender....that's longer than most marriages!  

Feel free to tag me with any questions.  @Kyle Mccaw thanks for the mention!