Deal 1: Financing Setup

I didn't add (read forgot to) comments on how we financed deal #1 and wanted to clarify since I may have made it seem overly simple.  While it wasn't that difficult, I want to quickly state how this process shouldn't be daunting or scary.  Yes, it's like turning in your paperwork to be graded and no one likes being "judged."  But if you've done your analysis, taken the time to find this deal, negotiate it, write the offer then you have to be willing to be scrutinized a little either by a bank, private lenders, or hard money.  They're going to sniff this out and if you're "squared away" in terms of having your paperwork together quickly and respond to their additional requests for information about you rapidly the process should be painless.

While we had a relationship with an agent we didn't for a lender, though we figured with 2 full-time jobs and more than 2-years employment, plus we had the 20% we could relatively easily secure financing.  We asked the agent for a recommendation, which she provided a couple.  We contacted the lenders via email and obtained their interest rate range since they can't quote nor lock us in without us applying.  One of the lenders quoted us a range that started 1/8 point (4.75%, no points) lower than the other so we applied for the mortgage with them.  Thankfully, when running our analysis we had our projections run with a higher interest rate for buffer so the deal remained a deal and actually got slightly (maybe $4/month) better.

From the application, we knew closing on time would hinge on our ability to feed the lender documents.  Thankfully we had some experience as we had recently bought our primary place in DC and knew the documents they'd be looking for immediately (W-2s, last 2 paystubs, 2 years Fed taxes, Drivers' licenses, bank statements, credit card statements, and other mortgage statements for the last 2 months).  This lender had their application on a website portal that also allowed for the documents to be uploaded, which was handy to send sensitive documents to.  Having said that, it's been more misses than hits on lenders that have this online feature and we often revert to emailing documents.

I did haggle with the lender on the phone a bit about the rate, since our primary residence was lent to us a full 1.5% lower than this investment property would be now.  I was quickly instructed on how investment properties are treated differently and relented the point.  Point well-taken on how when you think you're cool, banks may view you differently, and other people (lenders) like getting in on the deal as well.

Providing all that documentation in the first 2-3 days definitely put the ball in the lender's court, but we weren't entirely done.  About 10-12 days from closing I did field a call with the lender to verify balances and payment status.  This took about a 45-60 minutes to go through a couple banks/credit companies, but I merely verified my information and then rode along while the lender asked their questions.

Important notes:  At various times leading up to your agreed upon closing date the lender should provide you the current estimated closing disclosures (CD, formerly HUD-1).   First, it is a requirement to receive this document no later than at least 3-days prior to closing.  Second, lenders are aware of the legal requirement and anytime there is a change, will probably send you the updated CD again and may or may not ask you to sign it as acknowledgment.  I have haggled this document several times as I've caught changes that were missed or slightly off.  Knowing your information helps and knowing what work you have to do (obtain insurance, etc.) will help you perform a quality review of the CD.  Third, just because something is wrong don't hold-off signing.  Sign the document, but send it back with your itemized list of notes/changes so they are aware of your questions and concerns.  If you're uncomfortable, have a quick chat, but if you're more than a few days from closing, remember the CD is just an estimate.  You'll sign the CD again at closing.  Fourth, ask for help if you don't understand things you can or cannot "shop for" on the CD such as appraisals, inspections, insurance, etc.  And when you do obtain service for one of these items, provide that information back to your lender so they can know to update the CD.

In sum, a relatively painless process found us pretty much waiting for the closing date since the title came back clean and the lender was squared away early on.