I hope that somebody else will be able to help you with this question. I have not gotten a loan from an institutional lender for about four years. And I have never gotten very many, so I don’t know their rules very well. I have read many times that not having a job is a handicap in buying properties with institutional loans.
I’d suggest that you ask your question on the real estate financing forum of this CREONLINE.COM website. The people there deal with similar questions all the time.
Posted by Rob Ricker on July 29, 2003 at 14:41:07:
Banks charge origination points just like the brokers do. They have to pay their loan officers too.
Also, Brokers will usually get you a much better rate and require less down payment than a bank because they are going to send you to the lender that has a program that fits you better. basically, banks are limited to what THEY can do. Brokers have many choices and YOU win.
A particular bank will have a limited number of different loan programs. If your situation fits one of their loans, that might be fine, you can get a loan from that bank.
Loan brokers will know many different lenders, with a lot of different programs and requirements. If your situation is at all unusual, you might get a better loan or have a better chance of getting a loan through a broker.
And, ususally banks pay the loan broker’s fees, so you don’t save any money by going directly to the lenders youself.
One reason for my interest in a bank was so that I could go through a cash flow pro-forma with the lending officer. Currently I am unemployed though I do have a strong cash reserve. Would a broker be as easy to work with (assuming I have a strong FICA)?
I’m a Mortgage Broker, so my response might seem biased. Why not try a “No Doc” Loan. If you have excellent credit and a cash reserve, this might be the ticket. This will save you a lot of hassle, as you don’t disclose or verify income, employment, or assets. I don’t know of any Banks that will do this.
Are you saying you need to know how to calculate cash flow for investment properties?
Then, I think you need to read some basic books on real estate investing. Those for real estate classes at the college level always seem to have lots of mathematical calculations.
I’d assume that a mortgage broker could help you figure out cash flow figures, but I feel you would be wasting the time of a professional. Why don’t you get some commercial property prof formas from some commercial brokers and look at those? Or go to a real estate licensee and ask them about investing in income properties and get them to show you how to figure cash flow.
My mistake for lack of clarity. I am very comfortable with cash flow etc and have been reading the basics for two years now (reaching the point where it is well past time to get off the stump)
However, I do not have experience with lenders and do not know how to prepare since I have no salary currently. My guess was that I could show a proforma to explain the positive cash flow. Am I doing too much work (i.e. a good broker would not need this effort).
At the end of the day, I guess I’m wondering what if anything I need to do to secure a loan without a salary (though I do have a strong cash reserve).
