Seeking advice as a new investor

[Priti Gupta]

Hi BP community,

I am brand new to real estate. Trying to buy my first primary residence this year to do house hack or live in flip.

Already in talks with a lender. But wanted to check if anyone has any advice on a few things

1) How to choose a lender? Is it purely based on what rates they provide or is investor friendly?

2) If lenders are ready to do a soft inquiry on credit, can/should you get pre-approved with multiple lenders?

3) Is low down payment conventional loan preferable over FHA? (I technically have about 20% down saved up but don't want to use the entire sum on this one property)

Appreciate this community and the willingness to help rookies like me.

[Joe Facenda]

Choosing a lender for pre approval:  

If you are looking for a loan for a unique situation (say fix and flip), find a lender who can help but if you are looking at standard conventional or FHA programs do not even ask about rates.  Typically you can not lock a rate until you have a contract and since rates change daily whatever the lender tells you today will be different in two weeks when you are under contract. 

Furthermore, if you asked 3 lenders for rates today and the same three lenders each day for the rest of the week, you would likely have different winners each day.

Once you get under contract, shop rates and if the lender who provided your letter is way off, ask them if they will match it. 

Do select a lender based on their reputation in the market.  Your approval letter will go with your contract to the seller and listing agent.  You want to make sure the seller has confidence your lender will get you to settlement.  

How to find great lenders?  Ask your Realtor.  They are several types of lenders - big banks, online lenders, small local lenders, credit unions, etc.  Some turn off agents.  Ask your Realtor if they think that is important.  Now, if your Realtor can say to the listing agent,  "I've worked with this lender for x years..."  that is strong.  

Again, once ratified, most contracts allow you to shop for rates and give you the opportunity to switch lenders within a short period after ratification.  (At least the contract here in Northern Virginia does.  It may be different where you are.)

Your note presumes you are starting with a lender.  I would start with the Realtor and utilize their team for service providers for a smooth transactions.  And know that unless disclosed to you, a Realtor is not allowed to take any referrals from a service provider.  I know that everyone I refer is referred because they provide good service at a fair price. 

Hope that helps. 

When you contract is presented, you want to make that listing agent feel comfortable about getting to closing.