Tips For Landing The Best Real Estate Financing
Want to land more, and better real estate financing?
Financing is a crucial part of the real estate business. It is at least 30% of your success. Yet, it can also be one of the trickiest and confusing parts of investing. Get better in this area and everything else will go more smoothly and profitably.
- Be an Attractive Borrower
Are you a great borrower who loan officers will be thrilled about connecting with? Or will you be constantly given the run around because getting you approved is going to be an impossible mission? Getting your credit score up, having the right balance of tradelines, developing a track record of success, having assets you can show, and being able to present that well all makes a difference. The other half is choosing your properties well. There are areas and property and loan types that many lenders just don’t want to touch.
- Understand the Impact of Your Financial Moves
To maintain your creditworthiness, ensure you know how each of your financial moves can affect your status, credit score, and ability to qualify for loans. Pulling your credit too much can kill your chances of getting conventional real estate financing. Co-signing for a car or student loan for your child could blow out your debt to income ratios. Maxing out a line of credit could crush your credit score. Paying off and closing too many accounts could disqualify you from many loan programs.
- Know How to Present Your Deals
New standard loan application forms are being rolled out for residential home loans. Know those forms and how to complete them well. Commercial lenders may want a brief executive summary instead. Know what makes a good and attractive executive summary that will seal your financing, versus what will land your inquiry in the trash.
- Know Which Lenders to Approach with Each Deal
Different lenders have appetites for different types of deals and loans. They often have strong preferences which they may not advertise. You need to investigate and ask so that you aren’t wasting precious time or having your credit pulled too much. Some lenders will just string you along until you quit if they don’t like the scenario. Others will charge far higher premiums if the deal doesn’t meet their preferred criteria. Some love condos, others hate them. Some blacklist certain cities, counties, states or zip codes. Make sure it is a good fit before you make an application.
- Choose the Best Lenders
Some lenders are terrible. They’ll pull bait and switch tactics at closing, lose documents, commit fraud as a routine practice, never close on time, or have very low application to closing ratios, or just terrible after closing servicing. You want a lender who can provide reliable real estate financing, and who you can grow your business with.
- Choose the Right Loan Officer
The individual loan officer you deal with can be far more important than virtually all of the above factors. A truly great loan officer will help guide you in making a great application, finding the right fitting program, making a long-term financing plan, and is largely responsible for keeping your loan on track. The best will have connections and sway with underwriters and other vendors so that they can get exceptions to standard guidelines to get you approved and can expedite your closing.
- Know When to Refinance
Your loan officer can help you make a plan to optimize your real estate financing for each property and your entire portfolio. They may suggest you go outside and find a private lender to close your acquisition fast, and then come back and use a low rate, long-term loan once you’ve made your repairs and have seasoned the property performance.