I live in the Hurst, Euless, Bedford area of Northeast Tarrant country and am trying to decide where to seek my mortgages for real estate purchases and where to open my checking and savings accounts to manage our real estate with. Any suggestions?
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
6y
@John Miller so the main theory here is that if you an use Conventional or Fannie/Freddie type of money for your real estate needs then any bank can be used for your checking/savings types of accounts. But rarely is the best checking/savings style bank the best mortgage lender. I am a veteran. So Chase provides me with free accounts. But I would never use them for a mortgage on an investment property because of the amount of "overlays" they have with Fannie/Freddie.
But if you need portfolio/commercial types of loans then you DO want to use a smaller, more local community based bank. They will make decisions on how to lend their own money based on your accounts.
I hope this makes sense how I am describing it. Do you know which route might be better for you?
Oh, and just in case, here's a quick comparison of the two:
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.
Real Estate Broker · Austin, TX · Member since 2020 · 28 posts · 25 votes
6y
Josh,
I would find a small, local bank. As Andrew pointed out, conventional/Fannie/Freddie loans are a bit of a commodity - just about any bank or mortgage broker can originate those.
Once you get to 10 financed properties, or if you need the ability for more creativity and flexibility in lending, you need a local bank that will get to know you and operates in the communities where you live and plan on investing. Having a deposit relationship with that bank will go a long way when you start to try to establish a lending relationship.
Start working the phones - call 5 or 6 small local banks, ask to speak to someone in commercial lending and describe your situation. Ask in broad terms how they would work with an investor like you - loan terms, LTV, DSCR rations, etc. Make sure to ask for someone in commercial vs. real estate - telling whomever answers the phone that you want to talk about financing a house or getting a mortgage will usually get you routed to a conventional originator vs. the type of loan officer that you want to connect with.