How to find a Loan Officer......

[Sean Tippens]

After doing some more research, it seems as though I’m being pointed in a direction requiring me to find a loan officer that is t affiliated to any one bank.

How does one go about finding such a loan officer ?

What questions should I ask this person ?

[Andrew Postell]

@Sean Tippens ah, ok.  This might be lengthy but here's what you need to know:

Generally speaking there are 2 main types of loans for investors: “Conventional” and “Portfolio”

Conventional - I'll define these as loans that come from Fannie Mae and Freddie Mac (if you recognize those names). These loans are all 30 year fixed rate loans. They have the lowest rates we can find and since they are 30 year fixed...they allow us to cash flow better...which helps us qualify for other loans later. The draw back to these loans is that they are more paperwork heavy than the other "portfolio" types of loans....but if you have ever received a loan on your primary home, it's likely that you will go through the same type of paperwork here with conventional lending. Fannie/Freddie money = Fannie/Freddie rules. NOT the bank's own money.

Portfolio - I'll define these loans as loans that come from the bank's own "portfolio" of money. Sometimes referred to as "commercial" loans. These loans are a lot more flexible than "conventional" loans. Bank's money = Bank's rules. If they like you, then maybe they will lend to you. But since there is a limit to how much money the bank has access to....their rate will be higher...and usually a shorter term. The most common portfolio style loan in Texas is a 20 year adjustable rate loan. These loans are easier to get but the terms are different.

Fannie/Freddie types of loans will be available everywhere and those rules might change SLIGHTLY between lenders. Portfolio loans can run the gambit. Since each lender controls it’s own money you will have to call around to ALL the banks to learn about all the programs. A mortgage broker will help with this some…but even the best mortgage brokers don’t have access to ALL portfolio loans out there. 

So which loan do you qualify for?  It's probably hard to say in a setting like this but it's a good practice to have access to BOTH loan types just in case. 

If you do qualify for Fannie/Freddie money I wrote an entire post with Bigger Pockets on how to structure a cash purchase that you can read HERE  

The other element to this is that even after finding a lender....they may not be as investor friendly as we need them to be. So how can we tell if they have everything we need as an investor, especially using the BRRRR method? Well, I wrote a list of questions for you to ask your potential lenders as well. When interviewing your potential lenders make sure that they can answer these fairly quickly. If they keep saying "let me check on that"....that usually means they aren't used to working with us investors. Here's the list:

Questions for Lenders

1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
2. When do you start using “After Repair Value” on my property? (also needs to be immediately - no waiting)
3. How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
4. What is my minimum down payment required? (if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
5. How many loans can I have with you?
6. Can I change title to my LLC?
7. Do you sell your mortgages?
8. What is your loan minimum?
9. Can you explain to me what your reserve requirements are?

*WHEW*  I know that was a lot so feel free to ask anything additional that you need.  Thanks!