Qualify Your Lender
9 crucial questions to ask your lender when buying a multifamily or investment property
As you work to acquire income properties you’ll find that there are a ton of lenders and mortgage providers that offer ways to leverage or purchase a property. The most common providers are divided into two camps. The residential lenders and the commercial lenders. Below is a list of questions to help you understand which type of provider you’re with and how to get some important information to move ahead, or not! Residential lenders can often offer longer terms, lower rates and less money up front. Commercial lenders can offer more flexibility but shorter terms and a little more horsepower. Consider these questions when it’s time to sit down with a lender to discuss multifamily and rental income properties.
- What products are available with your company? Commercial or Residential (limit 10)?
- 20 Year mortgage with a 10 year fixed is common. (Ask about PITI, principle, interest, taxes, insurance escrows)
- 30 year fixed (usually 4 or fewer units, sometimes owner occupied)
- FHA/RD/VA or other program loans
- Can I “buy down” a rate or pay points? How does that work?
- What is a personal guarantee and how does it affect me?
- Can I borrow under an LLC?
- What are the consequences if I refinance with another lender? What if I pay it off early?
- I keep hearing about appraisals causing delays? Is that an issue? Desktop appraisals?
- I’ve heard of people assuming a mortgage when they buy. Could someone assume my mortgage if I wanted to sell it?
- How does it work if I want to roll improvements into the purchase? Furnace, Roof, Electrical, etc.
- Do you include “Assignment of Rents” in the closing documents?