When my wife and I purchased a home we used to live in, which was a duplex, the only financing we could find for the property was through a mortgage broker. Mortgage Lenders are by nature skeptical of everything. They didn’t believe we were going to live in the property because the price per unit was lower than the house that we were selling. The mortgage broker was our only way to finance the purchase because, at that time, we didn’t have enough of a track record to work with local banks.
Mortgage brokers can the key to financing great deals. A mortgage broker arranges long-term financing (loans that typically pay down in 15 to 30 years) through many different lenders for a fee. A correspondent lender is similar to a mortgage broker but does not service the loans it creates.
Oklahoma City Correspondent Lenders
From a borrower’s perspective, a correspondent lender is much like a mortgage broker. A “correspondent lender” is a special type of mortgage lender that originates and funds loans in its own name. Cindy Glenn is an OKC correspondent lender located in the OKC metro area. The article is just a short review of the type of loans you can get from mortgage brokers and correspondent lenders to buy investment properties in the Oklahoma City metro area. I have another article you might be interested in that discusses getting financing from small local banks in the OKC metro, also.
She shared with me some information about obtaining financing for investment properties in the OKC metro area.
- To get financing for investment properties, your credit must be to good, with a credit score greater than 740.
- The maximum loan to value is 85%, which means the borrower needs to bring a 15% down payment to closing plus their closing costs.
- To prove up income, they must provide 2 years of tax returns.
- A single borrower can have up to 10 of these types of loans.
The properties that a mortgage company will finance need to pass at least a cursory inspection. It also needs to appraise. What that means is that most mortgages offered through mortgage brokers are not for renovation projects.
Here is the typical process of getting financing with a OKC Correspondent Lender (Cindy’s company):
- Pre-qualification over the phone. She will pull your credit and gather other relevant information to determine if the deal would not work or not.
- Total cost analysis. At the step, Cindy would prepare several options so the borrower can determine what would work best for them. The nice thing is that the borrower still hasn’t paid anything out of pocket yet for items such as inspections, appraisals, etc.
- The final step is doing the inspections, title work, and closing.
Hey, by the way, if you are planning to invest in OKC rental properties for passive income then you need to learn the possible way to build a portfolio of OKC metro rental properties. Here is the workbook that explains you how.
One nice feature of this financing is that the loans have a fixed interest rate. For 30 year loans, the current interest rate is typically just under 5%. There is some variability because as Cindy puts it, there is risk-based pricing. Most local banks don’t amortize the loans for 30 years. This makes a bid difference for single-family homes in the $100K+ price range. It’s really difficult to get those into a positive cash flow situation if the loan is amortized over 10 or 15 years.
Here is Cindy Glenn’s contact information:
RMLO NMLS 210415
FHA and VA Loans
The other opportunity to use mortgage lenders is for FHA and VA financing. FHA and VA financing is owner-occupied. That means you have to move into the property. Some people have gotten this type of loan and never moved into the property. That’s something called mortgage fraud and is taken very seriously by OKC correspondent lenders.
The biggest advantage of FHA and VA loans is that the down payments are low (3% and 0% at the time of this writing, respectively).
That said, you can live in this type of property, and later move out and lease it.
The other situation is if you are planning on buying a 4-unit or less property, and you plan to live in one of the units. Check with your OKC correspondent lender for special conditions that may apply to these. And, if these types of properties are currently eligible for those programs.