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Updated almost 8 years ago, 01/16/2017

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7
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2
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Jennifer Cornforth
  • Real Estate Investor
  • Kilauea, HI
2
Votes |
7
Posts

How long do I need to wait between loan applications?

Jennifer Cornforth
  • Real Estate Investor
  • Kilauea, HI
Posted

Hi there,

I'm new to this forum. My husband and I just bought and started renting out our second property (besides our home) and I'd like to buy one more property this year. But the thing is that although we own all our properties outright (no mortgages) we got a loan this past June. Though we paid it off within a few months (the loan was to finance a move), it's still on our record. Not only that, but we'd sort of done a loan application the fall before last—when we bought our first rental property. It got denied, if I recall, but we didn't care because we had cash.

Anyway, to the banks, it looks like we've been running around asking for money. In reality, we own 3 properties outright and haven't had so much as a late credit card payment in 20 years. Borrowing is a massive hassle for us for reasons I don't want to get into. I WISH i could fast forward to 1.5-2 years from now when we can count our rental income as "income" for tax purposes.

My question is, how long should i wait at this point to apply for a loan from a bank? We have one aborted application from Nov 2015, one heloc from Jun 2016 paid off in October 2016. Should i wait until June 2017? Wait until we have 2 years of rental income on our taxes? Or look for alternate financing? 

I'm in Hawaii, if that makes any difference. :)

Thanks in advance for your advice!

Jen

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7,881
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6,283
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Andrew Postell
Lender
Pro Member
#1 Creative Real Estate Financing Contributor
  • Lender
  • Fort Worth, TX
6,283
Votes |
7,881
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Andrew Postell
Lender
Pro Member
#1 Creative Real Estate Financing Contributor
  • Lender
  • Fort Worth, TX
Replied

@Jennifer Cornforth there is absolutely no issue based on what you described.  I have many customers that do several applications in a year and have no issue with receiving new loans.  It is normal for a bank to ask about companies that have checked your credit in the past 3-6 months.  There is usually a standard form for this and your explanation can be:  "Shopped for Home. Mortgage history on credit report".  And that's all you need to satisfy their "inquiry explanation".  Hope this helps!

  • Andrew Postell

User Stats

928
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271
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George Despotopoulos
Lender
  • Lender
  • New York, NY
271
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928
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George Despotopoulos
Lender
  • Lender
  • New York, NY
Replied

That you're in Hawaii does make a difference, in that I'm a bit envious of you. 

Credit inquiries can hurt your score. It also can come across worrisome to some lenders. The fact that you're seeking financing so aggressively and have not been able to procure a deal draws some attention. But, this shouldn't be a deal breaker from a lender's perspective, if they are reasonable. They may take more time during underwriting to assess your credentials but eventually will ask why you had so many inquiries. A short explanation of the reason should suffice. 

If your report is wrong about something, you should contact the agency and notify them of it. Also, you can provide proof to your lender. And having one loan application denied (or even 2-3) is not the worst thing. Like I mentioned above, they'll look into it a little more, do some due diligence, and you'll just explain what the inquiry was about (that you were looking for financing to purchase a property. You have a good record from what you've relayed in your initial post. You really do not have to wait much, especially with alternate financing (which is commonly referred to as private money or non-traditional lenders). 

In terms of having your rental income on your taxes, different bank/traditional lenders have various loan programs and products that have different criteria/requirements. In order to find out how long you'll have to wait for that rental income to be factored in, you'll have to speak to someone there.  As for non-traditional lenders, your rental income is what matters during pre-qualification and underwriting. Non-traditional lenders look at the property's income, not your personal income.

  • George Despotopoulos
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User Stats

447
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295
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Loren Clive
  • Residential Real Estate Broker
  • Paia, HI
295
Votes |
447
Posts
Loren Clive
  • Residential Real Estate Broker
  • Paia, HI
Replied

Aloha, Jen. I'm in Hawaii, too (Maui.) I'd just get another HELOC. American Savings Bank has the lowest rates locally, or you can try Quicken online.

I always shop a bunch of lenders when I'm buying, and there's nothing wrong with that. 

Congratulations on being debt free! Gives you tons of options.