5 Ways to Make Working With Conventional Lenders Easier

[David Drew]

I'm in the process of funding a conventional loan for my first deal in Binghamton, NY (Broome County).  I'm also leveraging equity to do a cash deal simultaneously.  Some days I sit back and assume that everybody's doing what they're supposed to.  Other days I hound them and complain.  It all depends on my level of patients.  Not likely the best use of my time, but I'm impatiently trying to get to the point where I'm cash flowing...you understand.  

As I lament about how difficult and ridiculous this underwriting process can be, especially considering that I have A+ credit and I could pay the mortgage on this deal without getting rent, I figured I'd share a few best practices as I go.  So, here are a few of them:

1. Don't get mad.  the processors are just doing their jobs and they aren't necessarily the one's who feel it's necessary to run your credit three times and watch like hawks for every $100+ cash deposit you make.  Easier said than done, I realize.
2. Ask questions.  If something doesn't feel/sound right (like the aforementioned hard credit inquiries I noticed on creditkarma.com) ask for some clarification.  Often times, you're either right and it can either be easily explained or rectified.
3.   Get good at filing.  I have great credit, some money and a good day job.  That hasn't stopped my funding company from asking me for the same employment, paystubs and salary information no less than three times, so far.  I use their upload portal and every time a month ends or a statement is posted to one of my accounts, I save the pdf in a file.  That way, I just grab it and upload it, before the inevitable redundant request comes again and again.
4. Find a good conventional lender.  My goal is to continue doing business with the partners that make that easiest and to move on from others.  Shop around.

I'm open and eager to hear all other suggestions in regards to making this tedious process better...I realize eventually I'm going to get into Hard and Private Money, partnerships and Self Directed IRA cash but hell, the rates and fixed nature of this debt are just too attractive to pass on until I've maxed out.

[Chris Mason]

Hi @David Drew,

1) Typically only deposits that amount to >50% of gross monthly income need to be sourced and papertrailed. Sometimes underwriter judgement call asks for more, so I typically ask for >20% to be sourced and papertrailed. $100 is pretty ridiculous, unless you only make $300/month or something. 

3) That's the lender's incompetence. Many have gone "too digital," and paperwork gets lost in the black hole of the mortgage software (I've used all 3 of the top 3 mortgage origination software packages, all are complete and utter garbage... hint hint for any software engineers reading this). It's not super hard to maintain physical paper files. One of the top consumer complaints about getting a mortgage is repeated requests for the exact same paperwork, which old timers will note was not a problem 20 years ago when it was all paper files and everyone knew what "stacking order" was and lived by it like a bible. Sometimes technology gets in our way.

Other than that, good stuff. 

It's also really helpful when a REI has a spreadsheet or similar listing their schedule of real estate, rents, PITI, mortgage balances including HELOCs, etc, especially if it's in Google Sheets. We're obviously not going to use those numbers without validating, but it's good for envelope math and makes it super easy and quick to identify if we're missing any paperwork upfront. Sometimes technology helps us.