BiggerPockets Money Podcast - 303: The Secret Steps to Getting Qualified for the Best Mortgage Possible

Episode Date: May 23, 2022

You may have seen mortgage tips posted throughout the forums or in the BiggerPockets Money Facebook Group, but rarely do you get preapproval tips straight from a lender themselves. As the housing market stays hot and interest rates continue to rise, it may seem harder and harder to get approved for the amount, or the interest rate, that you want. Now, instead of guessing what you can do to increase your financeability, you can get answers directly from the source! Joining us today is Jon Lallande, former mortgage lender, now real estate investor. Jon has helped close tens of millions of dollars in mortgages and has funded homes across the US. He’s on today to help us separate the wheat from the lending chaff so you can have a smoother preapproval process. Jon touches on the different types of lenders, how to increase your credit score before you apply for a loan, getting around lender “overlays”, and how tax deductions can be dangerous for self-employed professionals. No matter your qualification query, Jon probably has an answer to it. Listening to this episode may just give you the steps you need to finally lock down that first deal, primary residence, or next investment property! In This Episode We Cover The easiest way to make yourself “attractive” to a lender  Lender overlays and how to get around them so you can get preapproved The easiest way to raise your credit score so you can get the best loan possible The upside of PMI (private mortgage insurance) and how to purchase properties with low money down Why many investors put themselves in mortgage fraud territory and how you can stay out of it How to get a mortgage as a self-employed individual and when NOT to take deductions And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Mindy's Twitter Apply to Be a Guest on The Money Show Podcast Talent Search! Subscribe to The “On The Market” YouTube Channel Listen to The “On The Market” Podcast: Spotify, Apple Podcasts, BiggerPockets Finance Friday: Building Your Financial Runway Even with Irregular Income w/ Eric Dunn Finance Friday: Should You Pay Off Your Mortgage Early or Invest? Ginnie Mae Website Credit Karma Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 303, where we interview John Lalonde and talk about mortgages, lending, and real estate investing. It depends what your goals are. So there's primarily, there's two different types of lenders, right? You've got your residential mortgage lenders. They have three different occupancy types, typically, right? You've got your primary residence. You've got your second home and you've got your investment property. So those types of lenders are going to be backed by agencies such as Fannie Mae, Freddie Mac, Jenny May. And Jenny Mae does all the government loans of H-ABA. Fannie and Freddie are doing your standard conventional loans. All of your, you can do a primary residence with them. You can do a second home or you can do an investment property. Hello, hello, hello. My name is Mindy Jensen.

And with me today is David Hip Hip, Hooray. It's funny because you're such a tough guy. David and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable. for everyone, no matter when or where you're starting. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate or start your own businesses, we will help you reach your financial goals and get money out of the way so that you can launch yourself towards your dreams.

David, I'm so excited for today's guest. It is John Lalonde, who used to be my go-to lender until he left. He decided that he wasn't going to be in lending anymore, but that doesn't mean that all of the information that he's had for years of being a lender has just suddenly left his brain. So he is joining us today to talk about lending and how to set yourself up to be approved for the most money, to have a like a smooth experience with your lender. In today's market, you really need to be able to act fast in order to be able to close. What I'm seeing when I'm making offers is that it's not necessarily the highest offer

that gets accepted, it is the one that can close quickly, the one that can, is most assured to close. And, you know, saving 50 cents a month on your payment isn't the same as having a lender that can close for sure as quick as possible. Yeah, John, aside from being not only the world's okayest recondo, Marine Corps reconnaissance veteran, which I tried to get you to say, but you skipped over in my intro that I wrote out because, you know, I'll offend him. But, no, so John and I are, I guess you could say borderline besties, right? I mean, he lived in a room in my house for a year during the pandemic in San Diego. He, both of our spouses lived out of, out of state. And so he put a got, he rented out the room on the bottom floor of my house. So we were, you know, worked out together, lived together, whatever.

I got to witness him getting his MLO license for his entire first year, year and a half. He was crushing loans. I mean, he was my go-to guy for anything in California. and he was phenomenal at it. And then he was also really good at other investing and found that to be a little bit more enjoyable and a little bit less time consuming. And so he kind of moved more towards that route. But John's just an awesome dude, one of my favorite people.

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Beyond audiobooks, you also get Audible Originals, podcasts, and a massive. massive back catalog across business, health, parenting, and more, all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP Money. Yeah, he has a really great money story, apparently, which I didn't realize until after we were done with this whole conversation.

So John is definitely going to be back on the show in the future to tell us how he's able to save something like 70% of his income living in a high cost of living area. So that'll be a lot of fun. John the Lund was a former recon marine. He was my go-to lender for several years until he left me to go do real estate investing. So John, welcome to the Bigger Pockets Money podcast. It's super exciting to actually see you in real life for the first time. You were at the BPCon in, where was it, New Orleans. and I got COVID five minutes before I was supposed to get on a plane to come down.

So I didn't actually get to meet you in real life. At some point, we'll connect in real life. I'm so excited to talk to you to me. I didn't think this was real life either. We're still virtual, Mindy. Okay, fine. It's nice to look at you on a computer screen. COVID real life.

It's nice to see you too, Mindy. Thanks for having me on. Thank you for your support. Thank you for your support. Thank you both for your support on being on my show today because I have a lot of questions about lending. And David doesn't know anything, so I thought I talked to John. John, brain dump.

Tell me everything you know. Everything I know. Okay. There's a very short podcast. There's a lot of confusion. Yeah. Shush. Yeah.

You're going to make everybody turn it off before they even get started. So there's a lot of confusion in getting a loan. Even if you bought a house a few years ago, things have changed. It seems like things are always changing, almost like as soon as you know the rules, they change them on purpose, just to keep you on your toe. So it used to be you just, you know, you gathered your W-2s and your check stubs and you gave them to your lender and blam, you got a loan. And now there's a lot more involved. So let's play pretend.

Pretend I need a loan. What can I do to make myself the most attractive to a lender so that they give me lots and lots of money? Okay. So there's really, it depends what your goals are. So there's primarily, there's two different types of lenders, right? You've got your residential mortgage lenders. They have three different occupancy types, typically, right? You've got your primary residence.

You've got your second home and you've got your investment property. So those types of lenders are going to be backed by agencies such as Fannie Mae, Freddie Mac, Ginny May and Jenny May does all the government loans of HAA. Fannie and Freddie are doing your standard conventional loans, all of your, you can do a primary residence with them, you can do a second home or you can do an investment property. So we'll talk about that first. they're primarily going to be looking for a couple of things. Now, when I talk about residential mortgage lenders, they all have generally the same guidelines.

Some companies have something called overlays. So an overlay is exactly what it sounds like. It's an additional guideline that comes with on top of the Fannie Freddie, Jenny Mae. It's an additional guideline to kind of make their criteria a little bit more strict. So generally what you're going to be looking for on a Fannie Freddie product or any sort of agency. product is stable income and good credit. Those are those are two of the really like really the things that you're going to be looking for. So what does that mean? For self-employed borrowers, and that's what we call them in the mortgage world. We've called them borrowers. So for self-employed borrowers,

with any sort of fanny, Freddie or any sort of agency backed loan, they're going to want a two-year history because they want to show that, you know, let's say you have one year of one year history and you were in a field. You were selling ventilators, for example, in 2020. Well, you had a pretty good year in 2020 selling ventilators. Does that mean that you're always going to have a, you know, say you made a million dollars in 2020 selling ventilators? Does that mean that you're always going to have a million dollar year? Probably not. You probably, we probably won't need ventilators for hopefully.

Let's knock on wood for the next five years, right? Let's hope that that dies down. So an underwriter's not going to look as much as like, okay, well, what type of job is it, are you going to, are you going to continue with that income? they're going to want to see stability there. So for self-employed, one of the best things you can do is you have that two years of history. And they're going to even it out. So they're going to average the two years of income. What they don't want to see is they don't want to see an incline.

So I know you might have mentioned I'm not actually a mortgage lender anymore. So the guidelines could have changed. But typically they don't want to see more than a 20% decline in income from the two years. So if your income's declining, then they're probably going to wonder why, right? They're going to ask you questions. Maybe you have to write a letter of explanation saying, hey, this is why my income is declining. And they might just use the lower of the two instead of averaging it. So that especially, you know, that applies just for example, we're looking for stable income. So when you're self-employed and you're looking for an agency finance, typically if you're looking for a primary residence or a second home,

There were recently some pretty crazy changes with the interest rates for second homes. My theory is the big agencies don't want people buying second homes because they're realizing they're risky. A lot of people have been buying them lately, making them Airbnbs. They don't have any income. They're just second home. So what are people likely not going to pay for when they lose their income, right? Their second home. They're going to keep their mortgage.

Everybody wants to keep a roof over their family's head. but a second home, maybe they let that go. So the agencies have tightened up a lot on the second home. They put something called loan level pricing adjustments, which is just an adjustment to your rate. They're going to make it more expensive for you to get that loan. So anyway, I know that's a lot of information just for your self-employed borrowers, but for yourself employed, they're going to want to see reserves and they're going to want to see stable income.

Right. So a lot of people are like, well, what if I don't have the stable income or what if if I just started my business. Well, if you're trying to buy a primary residence, it's going to be tough. But you can also look into something called a DSCR loan, a debt service coverage ratio. If you're looking for an investment, they're basically lending against the asset instead of your personal income.

So that's a great option for people to ask your lender about if you don't have sufficient income and you want to get a DSCR loan. Yes, Mindy, I can't tell. It looks like you're raising your hand. I am raising my hand. Can you get a DSCR loan for you? you to live in or is that just for an investment property? I can't see any reason that you wouldn't be able to get a DSCR loan. I'm not 100% on that, but I've never seen anyone get a DSDR loan

for you to live in because how would you pay what income's coming in if you're living in the property. What I don't know is I don't know if you'd be able to get one for maybe a multifamily property if the property was generating enough income to make sense. I honestly don't know the answer to that. But they're primarily for investment properties. So just to kind of drive this point home, as John actually did a mortgage for myself, I left the military and was in this exact spot where I have, I'm self-employed, I make a decent amount of income, and none of it shows on tax returns because it has, either hasn't been around long enough or I wrote stuff off or whatever.

And I ultimately ended up having to do, we did a 5% conventional. And I had to gift my wife the down payment via, you know, the fancy gift letter. and then she bought the house without me on the mortgage at all because my personal finances were essentially dragging us in the hole, even though ironically in a gross sum, I make more money, but it doesn't show. And so it- David has a good CPA. So it works out.

But there was one other thing you mentioned that I wanted to touch on real quick before we moved on, the overlays piece. And you said it and you said it all smooth and everything was great. but I don't know that people realize how important that is to understand. And we'll just use as a super brief explanation like something with the VA loan. The VA loan, the guideline has no minimum credit score. There is no requirement whatsoever. Every lender and their mother has a credit score requirement.

Most are probably like 620, but I've seen some 580. I ran into a guy online the other day who got approved for a loan with a 570. So it's important to understand that an overlay, if a lender tells you no, or you're not qualified because of such and such. You want to make sure that you understand if that's an overlay or an actual guideline from the lending side because it's quite possible that you could say, oh, okay, and then go to another lender and they tell you yes. And so it's valuable to understand the difference just so you know if you're being told

by that bank, no or if you're being told by the actual powers that be, no. Oh, so how would I ask my lender that? Yeah, that's a great question. And I was just thinking about that. typically a lender is not going to tell you, like your loan officer is not going to say, oh, hey, this is an overlay. If you go somewhere else, they might be able to do it. So that would be kind of tough.

But what you can always do is if it's an agency loan, Fannie Freddie, Jenny Mae, you could always, I should also include our friend USDA, like the USDA loans, I think, are under Jenny May. So you could always go and Google the guidelines. A lot of people don't know this. And it throws lenders for a surprise when their clients come to them and they go, actually, I googled this guideline. And this is what the guidelines.

actually says. So if you look, if you go on Fannie Mae, Freddie Mac, Jenny, you go on any of their websites and, you know, many, I'm sure you can put it in the show notes so everyone can go back and look at it if they want to. You can Google the actual guidelines and then you can see, okay, is this something that's in the guidelines or is it something that my lender is making an overlay? For example, VA loans with the credit score. If a lender comes back and says, hey, your credit score is 600 and you're not getting approved for the loan? Well, and you say, is that an overlay, then they might say no, go back, look at the guideline and you'll be able to get a straight answer from there, which means you can go to another residential mortgage lender.

Now, a lot of people make the mistake, and Mindy, we spoke about this before, and I believe you posted it in the Facebook group, where they will, they get the advice, just call a million different lenders until somebody tells you yes. Great. That's great. However, if it's an agency guideline, for example, let's say, let's say, you. Let me think of one that would apply. If it's an agency guideline, let's just use the example for self-employed borrowers.

Let's say that they're looking for a two-year average. And the guidelines are pretty clear that you're looking for a two-year average. If it's an agency guideline and you go to 50 different lenders, they're all going to, 50 different residential mortgage lenders that work for a mortgage company that are selling their loans to Fannie and Freddie, they're all going to tell you the exact same thing. They're all going to tell you that we need to average your income over two years. And so for something like that, you can call 50 different lenders.

It's not going to matter. So then you would have to go to a different lending type. So that's where you could go to a portfolio lender or a local bank. Somebody that has flexibility with their own guidelines, they're not selling their loans to Fannie and Freddie. So they're able to give you a lot more options. So I remember people really attacking that Facebook post because they didn't really understand the point of it.

Yes, some lenders have overlays. yes, some lenders, underwriters can either miss, they can miss things. That happens. Underwriters are human. So they miss things every once in a while. Some are a little bit more lenient, a little bit. But if it's a general like Fannie Mae Freddie guideline, they're going to tell you the same thing. So it's important to really know, is this a guideline or is my or is the company being strict?

And if it is a guideline and you're just not able to meet that, then go to a different lending type. Go to a portfolio lender or go to, you know, a local bank. somebody that has a lot more options, right? So can you define what a portfolio lender is just for people who are listening who may not know? Yeah, so a portfolio lender, the big difference is they're not going to be selling. They have their own loan products. They're not going to be selling them to Fannie Freddie or Jenny.

A lot of times they'll have the options to do those loans. At least sometimes they will, but they typically have their own guidelines. They're going to underwrite it. So Dave and I own a good bit of property. we use portfolio loans on, I believe everything we own is under portfolio loans. And the terms are crazy. So if you look at, it's been a minute. So I believe a max cash out refinance is typically 75% on an investment property.

But our lender at the portfolio loan, he was able to give us 85%. And no balloon, like some really crazy terms because he trusts us. He sees our competence. He looks at our P&L. He looks at our personal financial statements, which is something that they typically won't ask you for in residential mortgage lending. They don't care what your personal financial statement looks like. They want to underwrite it to the Fannie and Freddie guidelines. So portfolio lenders just, they have other options and they're going to look at different things.

They're underwriting the risk in a different way. So how do I find a portfolio lender? Oh, there's an app. And actually, David gave me this app. Let me look if I can look on my phone. There's an app for that? There's an app for it. I see.

Oh, okay. Are you even old enough to remember this ad? There's an app for that. There's an app for that. Yeah, you have to say the exact right word. So if you go in the app store, look up local community bank or community bank locator, it shows up as ICBA. I've never figured out why it's an I instead of an L, but whatever.

And yeah, it literally just opens as a zip code. and you type in the zip code and it pops up all kinds of local lenders in your area. ICBA. That's awesome. Another kind of more intricate hack for people that are really good with data and maybe really good with pulling data and skip tracing, like the real estate investors that are listening to this podcast. One of the things that we did recently because we're trying to establish a good relationship with a local bank for a lot of our flips is we pulled a list of all of the home sales that were bought in the last 12 months.

And then we looked at who the lenders are going to be used for commercial loans. And so you could filter all that if you go through list source. And you can see who's being used the most. And you can call them and find out, you know, that's typically who all the investors are working with. If you pull a list of all the commercial loans that have closed on residential properties in the last 12 months, you can see you just filter in Excel by the most common name and you can call them. Great hack if you're good with data. Okay.

Let's get back to residential lending because I think that most people are interested in the residential lending. Okay. Why does my credit score, when you pull my credit score, why is that different than when I go to credit karma? So there's a reason that credit karma is free. I love telling people. It always surprises them.

Credit karma gives you an estimate of what your credit score is. But really with that app, like if you look at how much credit karma, how much credit karma, how much income they bring. I bet it's a good bit because what they're really doing is they're selling your data to credit card companies to mortgage companies. That's why they exist and they're able to give you kind of a round number of what your actual credit score is. But it's not a real credit score. It's just an estimate. I've seen credit scores from, you know, what people tell me their credit karma is. I've seen them off up to 80 points. So it's it can be pretty significant. Yeah. So they don't have a full history of your entire credit. It's not going to be

accurate. So if you are looking at your score, you know, credit karma can give you can a lot of times it'll be a good indicator. 20 points hit or miss a lot of times. But don't be so don't fight your lender and say, hey, my credit karma says that I have a 720 and you're telling me I have a 690. They're right. They pulled your score. That's what it is. So I think at that point, your best, your best option, is to ask them if they can run something called a credit simulator and see what kind of debt you can pay down, if any, to help improve your score. Because there's some things you can do immediately that will help improve your score overnight. And you can do what's called a rescore. So if you have bad credit, maybe for the most common is overutilization.

So if you're utilizing 90% of your credit limit, a lot of times if you just pay it down to 20%, maybe 30%, then you'll see an improvement overnight. And all you need to do is send that to the bureaus and your lender can do this for you most times. They can send it to the bureaus. And the bureaus will come back and say, all right, here's your updated credit score. I don't know if all lenders have the ability to do that, but I know the company that used to work for, they were really good about that. And they can get your credit score changed overnight. I'd be willing to bet they have the ability. And it's just a matter of whether or not they're a lazy lender.

Yeah, but you know, I mean, now everybody knows that that's an option that you might be able to improve your credit score overnight by doing something called a credit. simulator or rescore. I've never heard this and I feel like a snob for saying this, but I've never needed it because my parents gifted me their credit score when I was 17. I graduated from high school. They said, well, now that you're out of high school, you can have a credit card. So they opened up a credit card for me in their, well, I was a signer. Yeah. And then their amazing credit score transferred to me when I turned 18. So I've had an 800 plus credit score my whole life. Yeah, you can give it. But I didn't know that you could do this.

This is amazing. So, holy cow, I just marked this and I'm going to make that a whole little clip that I'm going to put on social media because that's amazing. That is a fabulous tip. Another thing that, you know, a lot of people will run into is accounts that are in collections. And they believe that if they pay them off, then they'll go away. But a lot of times that's not the case. Sometimes that can actually make your score worse. And so I say a lot of times.

So take it with a grant of salt. But what you can do is you can reach out to them and you can say, hey, I have this account in collections. It's got $20,000. If I pay it, will you give me a deletion letter? And if they give you a deletion letter, that you can bring that back to your lender. And that means that's wiped off your account. Now, you have a little bit of leverage here because you owe this company money and they want their money. So if you pay it off, you're probably not going to get that deletion letter.

Why would they help you? They're already good. but why waste their time? Now, I will say that there's, you know, a couple of times that I've seen where the company won't give them a deletion letter. They're like, you can pay it off, but we're not going to give you a deletion letter, even if it's a small amount. And I honestly don't understand why they're getting money for the company.

I'm thinking it's just a lazy employee that works for the company, and that's why they're not doing that. But it's something else you can do if you've got an account in collections is you can say, hey, you can call whoever the, whoever owns that account and say, hey, you know, I've got this, this accountant collection. if I pay this off, will you give me a deletion letter and then you can improve your score right away? Do you have any other tips for improving your score? I mean, the basics that a lot of people, you know, are already probably no, but try to keep your

utilization around 10%. Don't take out loans and then pay them off immediately. Some people think that that helps. It doesn't, it doesn't look good on your credit if you, you know, take out a huge loan and then pay it off immediately. You want to actually have utilization. If you keep it under 10% even better, long history helps. Don't make any late payments. That should be an obvious one, but late payments really hurt your credit score. So yeah, those are just a couple of them that I've seen. Typically, when I'm running a credit simulator, when I've ran them in the past,

what I'll try to do first is I look at the utilization and I put it on at about 9% because I'm looking to save the client the most money and be able to improve their score the most. So I'll put all their utilizations at about 9%. I've seen that to help the most. And then I will then look at collections accounts. Okay, what happens if I remove some of these collections, collections accounts? And, you know, a lot of times that will help. And then there's credit repair companies.

You want to make sure you vet them because not all of them are that good. But credit repair companies can also really help your score. Typically it takes about six months. Oh, six months. Okay. What is a good score? What is a mediocre score and what's a bad score? So I love when I see people online and they're saying, I have an 850 credit score.

I'm so much better than you. It's like, okay, cool, that doesn't do anything for you at all. Other than boost your ego, which is awesome. But if you already have a giant ego like me, if you have anything over 740, then you're completely solid. So as far as at least the agency guidelines, if you're over a 740, there's that thing I told you earlier called a loan level price adjustment, at least for the company that I worked for, if you have over a 740, there's zero loan level pricing adjustments. So you could have the

440, 741, 850, it doesn't matter. You're going to have the exact same interest rate as long as you're over a 740. So I would always shoot for, you know, hey, try to get a 740. If you have an 850, maybe use your credit a little bit more. Take out some more loans. I know some people are against that, but money can work for you pretty well if you use it right. So, there's no really, there's really no benefit of having over an 800. I've never seen one. I never have worked in the auto space financing space, but from what I've seen, I guess with some personal stuff, I've never seen any benefit for having over a 740 in the auto space as well. And then maybe and then the personal loan. I don't have a ton of experience with that, but I'd

imagine it's probably pretty similar. Now, if you're looking for government loans, 640 is actually, at least at the company that I worked for, if you have over a 640, if you have over a 6. There's no loan level pricing adjustments. So if your rate was 2.75 and you have a 641, it doesn't matter if you have an 850 credit score, your loan's still going to be at a 2.75. And those rates don't exist anymore. But just something to take into consideration. I want to correct you really quick. You said 640.

Did you mean 740? Nope. You can go down to 640 credit score and still have no loan level pricing adjustments? Pricing adjustments for, yeah, for VA loans. That's how those were our. Oh, VA loans. Okay, I missed the VA. Yeah.

Yeah, yeah, sorry. I should definitely clarify. So for VA loans, that was our guideline. I think it was at the time it was VA and USDA. I do believe that FHA had, it was 680. And then there was no LLP for 680. So that's why a lot of times when people come to me, they're like, hey, I want to do a three and a half percent down FHA loan because it's the best loan.

And I'm a first time home buyer. Well, not necessarily. So if you have bad credit or your credits under a 680, and every lender has different loan level pricing adjustment, so you'd want to talk to your actual lender about this. But if you have a lower credit score and you're going higher on what's called your debt-to-income ratio, which we haven't even talked about, but that's 100% how residential loans are qualified, called a debt-to-income ratio. I could explain that a little bit later.

But if you do have, if you have bad credit and you need to go higher on your debt to income ratio, maybe you're trying to buy more house, then FHA loan could be a great option for three and a half percent down. You'll have better rates. However, conventional loans, you have a lot of times for first time home buyers. They have three percent down options. And the PMI is actually a little bit less, the private mortgage insurance. So that can be a better option for people that maybe they want to put three percent down. They have good income and they want, you know, and they want to benefit from the lower, the

actual lower monthly payment. So a lot of times the conventional 3% down, if you have good credit, can be a better option for you. Okay. I am hugging you. David, you're welcome to ask questions, but not right now because I have more. So you said, you just mentioned private mortgage insurance and you mentioned 3% down for a conventional loan for first time home buyers. Is that only available one time? Or can I use it 3% down again? It really is because, you know, like a lot of times, You know, I pay JL loans are supposed to be for first-time homebuyers. There was a time period that you had to wait while I was in order to qualify. And I believe for the conventional, you actually had to do like a course online to qualify for the 3% down.

There was a time limit. I want to say it was seven years, but don't quote me on that. Definitely that would be something to reach out to your lender about. Okay. And then let's talk about MIP and PMI, which is the same but different because I think a lot of people don't recognize that this change. Yeah. The upfront mortgage. Yeah.

Yeah, just the upfront mortgage insurance premium and then the PMI. So the funny part is about PMI is a lot of people think that it protects them in some way. It doesn't protect you in any way. The bank is still going to take your house if you don't pay them. Basically, what they're looking at. Say that again. Slower. The bank is still going to take your house slower if you don't pay them.

Always. So the reason that the reason that, the reason that. there's something called private mortgage insurance is if you're a bank, right, and you're going to lend money to people. Well, if someone puts 20% down, so they've got some, they've got 20% equity at the very minimum, assuming no market changes, then if the bank has to take that house back, then they at least can make a little bit of money if they sell out at market value. Or if the market dips, they're at least covered, right? that the market dips 20%, they're at least covered that they can sell that house and they can

break even, right? Now, what happens if the bank has lent to you 97% of the value of the home, the market takes a hit at 20%, which you did a lot of markets in 2008, and you stopped paying your mortgage. What happens then? They lose money, and they don't like losing money. They like to make money. So that's why they have that private mortgage insurance. It helps mitigate some of their.

risk. It doesn't protect you in any way. So if your lender ever tries to sell you private mortgage insurance and you are not, you're putting more than 20% down, you're doing a VA loan zero down, then you need to run. I didn't even realize that people might think that that protects them. Yeah, no, if you don't pay your mortgage, they're going to take that house every single time. Yeah, it's a good idea to pay your mortgage. It's a very good idea. Yeah, I support that decision. On time, too. That helps. Okay. Back to David's comment about how he didn't have the history to buy the house. So he had to gift money to his wife. And he said, you said he has a very good CPA.

Let's talk about that because I have seen in the Bigger Pockets forums where people say, hey, I had so many deductions on my taxes that now I don't qualify for a mortgage. And I've seen other people say, oh, a good lender will be able to see through that. and see the underlying income. And that doesn't make sense to me, but I'm also not a lender, so I don't know. Yeah. But it seems to me that if I say I made $12 in my taxes last year, you're going to see that and be like, oh, she made $12.

Well, first I have to ask if any of your listeners work for the IRS. So I probably. Yeah, let's not dig into my specific return. No, no, no, no. Dave had more, Dave has like the most complicated tax returns that I've ever seen. He has like Schedule F income, which I've never seen before. Dave has income streams coming in from everywhere. So they probably just looked at his tax returns and said, I don't want to do that.

Dave has a lot of different stream. Probably not a good example because that doesn't apply to 90% of the people out there. And the people that it does apply to, they're typically more sophisticated enough to just go into a portfolio loan. So let's keep it, I guess to keep it. more simple. What you're asking is, do they give you any money back, right? Like, you have these deductions. Do they give any money back? Yes, they do. For your rental income, like, you know, you have some of your deductions, but they understand that that some of that isn't your actual deductions. We have a calculation, and it's, and it's given by Fannie and Freddie that's basically a

calculator and they have guidelines for it and say, hey, we can give you some of this money back. We can give you, you know, let's say 50% of your meals and expenses back. We can give you. So they will give you some back. Now, that doesn't mean that you're going to qualify for a loan if you wrote off everything. And they're going to, you know, they're going to give you back all of your deductions. There's a calculation for that. And it would be way too intricate. To teach someone how to calculate income as a lender would be, it would take a lot more than the rest of the time that we have on this call. But there is a little, there is, there are some things that they can do to help you out. But okay, so it's not, it's not totally false the information that they're giving.

I think that, I mean, every loan is different. Every situation is different. There's no way that you can cover every single one. Oh, let's have every single listener call in and you can give them a quote over and over. Yeah, that'll be great. Let's reiterate that I don't work for a mortgage company. Yeah. But that's interesting that that is available because it doesn't make any sense.

the government says that I can take depreciation on my rental properties. But then when I do that that reduces my taxes, now I can't get a loan. A really good example that. And the lender will give you some of that depreciation back. Okay. Because that doesn't actually, that's not actually coming out of your bottom line. That's still money that's coming, you know, you're still getting money in your pocket, even if you're showing zero.

So, yeah, they'll give some of that depreciation back. It's a really good example of one for a regular residential. The other thing that's probably worth of clarifying when you're hearing that online, is when you go online and I tell my story, right? Like, oh, well, I couldn't qualify for a mortgage because of my, the way my income set up. So I had to gift money to my wife so she could get the mortgage. Well, that's because it was a residential primary residence mortgage. I have gotten a ton of loans, like four or five million dollars worth of loans over the last two years on commercial rental properties, investment loans, whatever.

So, you know, you see these back. battle's going back and forth. And somebody's like, well, I don't have any income that I show on my taxes. And I qualified for a loan. Well, yeah, but if that's a portfolio lender or an investment loan or something, an investment banker is going to be like, oh, yeah, you've got this income coming in. Cool. We feel safe with this. Whereas a residential guy is going to be like, yeah, like, John and I were having the conversation. And I'm like, dude, you lived with me. You've seen how much money I make. And he's like, I know and I can see it. But it doesn't count because of this guideline. And I'm like, oh, okay. Well. Yeah. And that's something to take into consideration because I see this a ton online. It used to drive me crazy as a lender is you have a lot of people that will flaunt around their scenario. My lender did this. I was able to get this. Well, that's great. But they probably don't have the exact same scenario as you, right?

So I would see that a lot online where people would refinance primary residences. They would do a primary residence refi with a 40% loan to value. and they were bragging about their 2.875. And then someone was like, well, I just purchased an investment property with 15% down and I got a 5.25. Why are they so different? Well, because it's a completely different loan product and yours is a lot riskier. So it's something to understand that you really have to compare apples to apples. If you're going to be looking at, you know, you're going to be looking at someone else's scenario, your best option is just not to compare, you know, maybe use them as a baseline.

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slash money free. Getting ready for a game means being ready for anything. Like packing a spare stick. I like to be prepared. That's why I remember 988, Canada's suicide crisis helpline. It's good to know just in case. Anyone can call or text for free confidential support from a train responder anytime.

188 suicide crisis helpline is funded by the government in Canada. I think the bottom line here is just don't try to get a loan in five minutes. Talk to your lenders, especially, oh, I'm thinking about buying a load. Great. Call up a lender. Talk to them. Hey, this is my situation. Oh, okay.

Well, these are the products available. Okay, well, I'm trying to do this. Do you have anything else? I mean, don't call them five minutes before you need the loan done and ask them, you know, 500 different questions. You have to give them time to do research and explain things and understand stuff. And I don't know. Help me out here, John. No, that's a really good point.

So especially like if you're self-employed, it's a good idea. If you do plan ahead and you're not like me and you plan ahead two years in advance, which is good on you if you do that. But if you do that and you're saving up for a primary residence, you're self-employed. It might be a good idea to call your lender and say, hey, I'm trying to buy a house in the next year or two. this is my scenario now. Is there anything I could do better to set myself up for success? And they'll tell you, they'll tell you, hey, you know, they'll look at your tax returns. You want to show this much income next year. They can't necessarily, you know, your income is what it is. So they can't tell you, hey, don't deduct this. Don't do this. That's, that's illegal.

So there's things you would definitely want to call your lender in advance and ask them and ask them those questions. What can I do to set myself up for success? Really, this really applies for people that have income, which would be considered unstable. So anybody that's 1099, anybody that's self-employed, anybody that's part-time. So if you're a lot of times, like the weird ones are, like some of the teachers that work for different schools and they're part-time with different positions and they're not full-time all together and they don't have two years. Like, that's stable. Now, the people that are in the safe zone with residential mortgage loans are people that are full-time, W-2, and they've stayed in the same field for the last two years.

You have the most stable income that that's what a lender wants to see. Full-time W-2. Now, if you came out of, you know, college, you finish your degree. You don't need a two-year history most of the time. You know, your degree is, will count some of your schooling, will count some of that for some of that employment. So you can go straight from school into a full-time W-2 job. And a lot of times the lender will give you that, that W-2 income right away.

So that's something that people also don't understand. I'm like, oh, I have to wait for my two years. Well, it depends what your history is. always good to just ask, don't take anyone else's word for it, ask a couple of different lenders, you know, and when you are asking, go back to the guidelines and say, hey, is that a guideline? Is that an overlay? That will help you out a lot. Does that answer your question? Yes, no, that's very helpful. Now, let's talk about that recent college graduate thing. So I just graduated from college. I have no work experience. How long do I have to work there before I can get a loan?

So, I mean, if you're a full-time W-2, your degree is applicable to whatever field you're in, a lot of times a day or even an offer letter, an offer letter, and you can close after one pay stuff. That's really specific to the lender. My company was pretty lenient with that when I was lending. So it's something to ask, but a lot of times, you know, an offer letter. And I did, and I know that my company was more lenient because I had other people get turned down from other companies. And, you know, my company was able to do it with just an offer letter. and they would be able to close as soon as you get one paste up. Just for the record, because John's not going to dump it out there, that company is cross-country

mortgage. I'm going to throw it out there because you just said my company like 10 times, and Mindy's going to get blown up asking what company. So at least it's- Oh, I was just going to forward them all to my new contact there. It's out in the ether. Oh, if we can name drop, yes. She is way better than I was.

Yes. Yes. So if you need a reference. Maybe he said, yeah. Yeah. there was no education. She definitely is. No, she, so I actually haven't done alone with her yet.

Oh, you're in for a treat. She's awesome. I've been transferring my clients to, or referring my clients to my partner, Libby, who's wonderful. If you need an agent in Colorado, Libby's amazing. I love Libby. Yeah, I got to work with her a couple of times. She's awesome.

I love Livy. So, Libby is, well, Jolle is my new contact at Cross. country mortgage. So yeah, if you need somebody, please email me, Mindy at biggerpockets.com, and I will connect you. They are licensed in all 50 states. I can't guarantee that they will approve you for a loan. But they will at least explain to you. They will at least explain to you why they can't approve you for the loan. Your credit score is 403. We can't give you a loan. But let's do a credit simulator and send your credit and a re-score. I love that tip. Holy cow, that's a great tip.

Yeah. And, you know, this company is really good at doing them efficiently. Something that came up yesterday. Oh, I'm sorry. David, I have been hogging John. You ask him a question. Then I have one more before. It's okay.

I just had some self-interested questions such as if we, well, I guess my first would be, do you have a favorite loan product? Ooh. As far as for what audience? Because that's really, I'll just say that. Well, you're supposed to say VA loan so that I could lead into everybody thinks the VA loan's impossible to get approved for in this market. Yeah, I was hesitant to say that because not everyone is a veteran and I don't want to give

everyone FOMO, but you should join the military and serve your country and then you get awesome benefits. And if you're scared, don't be scared because you'll be okay. Yeah, the VA loan is by far the best lending product. Obviously, you need to serve your country first in order to. be in order to benefit from the VA loan. But the VA loan is really awesome. It's a zero down loan product that has no mortgage insurance.

It has the highest debt to income ratio as far as qualification. So you can get qualified. I've seen loans go up to over 70% on debt to income ratio. That doesn't mean that you're going to get qualified, but that does mean, let's stop for a second. And let me just actually talk about debt to income for two seconds, because I know we're running short on time. And it's really important that people know this.

So what your debt to income ratio is, is the, it's the income, it's the ratio for how much income you're bringing in versus how much debt you have. And that includes your housing payment. So for conventional loans, as of April 13th, 2022, at least as as of, you know, when I was in loans, it was 50%. So 49.999. So as long as you're making twice as much as the debt that you have. you're good, right? You can qualify for a loan, assuming all of your other credit, good income, good credit history, all of those things, some reserves. You can afford your down payment and closing costs. You'll be able to qualify for a loan. VA loans are really awesome because they look

at, they look at your income different. They look at something called residual income. So basically what they want to see is, hey, after your mortgage, after all of your, they do a small calculation for how many family members you have and all of your debt, how much income do you have left to pay for your groceries, to pay for, you know, your gas, blah, blah, blah, how much income do you have left? That's called your residual income. They qualify you based off of that, which is really awesome because it allows you to qualify for a lot higher of a purchase price than you would if you were going conventional

or FHA and you go zero down. So Dave and I used to work with a ton of veterans, both being veterans ourselves. And I've seen people that are in the military making, you know, $110,000 a year get qualified for a $2 million house. And yep. And that they had some income coming in from some of the additional units. They were house hacking. But that's the, you know, VA loans are, that's the only product that you'd be able to do that.

I don't want to hit on that too much because not everyone else, not everyone's a veteran. But if you want really good, a really good loan product, join the military and you can use a VE loan. That's my best advice for the, for the podcast. The biggest thing we saw, right? It was one point, was it 1.93, zero down. Yeah. Yeah. It was almost $2 million.

Yeah. In LA County, event. Exactly duty in the military. Yeah, I don't qualify for joining the military anymore. I aged out. I more or less wanted to throw that question out there because for whatever reason, the VA loan has this stigma between agents and lenders. And you hear all the time that you're not going to get an offer accepted with the VA loan because of X,

XYZ, and I always tell people that if you're getting told that you can't get a VA loan in today's market because it's too hot or whatever the reason it is, then either your agent or your lender or both are garbage, go somewhere else. They just don't understand it. I'm in this market right now as an agent, and I am going to tell you that your listing agent, the one who is advising the seller, is either in uninformed or misinformed about what it is to do a VA loan. Or, you know, or they are advising their clients. The clients are uninformed, misinformed. I mean, there are people who think that the VA loan comes with massive headaches and hassles.

Well, if you've got a house that's about to fall down, yes, the VA is not going to approve the property. The appraisal is going to be all messed up. But, I mean, John was telling me one time, he's like, I was like, do they have to have a dishwasher? He's like, it has to have an oven. That's all it has to have. Like, really? That's all it has to have? And he's done three VA loans for me. He closed in 17 days on two of them and 21 days on the other one just because like the load of what he had that week, like couldn't do a 17 day or whatever. But I was like 17 days, really? I even was talking to a fellow agent. I'm like, yeah, he says he can do a 17 day VA clothes. He's like, no way can he do a 17 VA clothes. He's just saying that. I'm like, he's.

he's wait and it was my first one with Sean hi Sean and he closed and I called up that agent I'm like he did it he did it in 17 days if you need a VA lender called John because he's amazing and you have to know how to work it you can have a really terrible experience as a VA as a listing agent accepting a VA loan there are no shortage of terrible VA lenders out there because they don't know what they're doing they're doing it wrong they don't understand how to like tweak the system. And I say that. I don't want to say that because it's not like you were doing anything illegal or immoral or wrong. You were working within the guidelines. But you figured out how to manipulate those guidelines so you could get it done fast. If you need a VA loan and you're not

using cross-country mortgage, you are doing it wrong. And it'd be just so you're, so you're aware when you go to any company and you hear a blanket, a blanket mortgage company, you have to understand that let's look at, we can use names, right? Company names? Sure. Okay, cool. Let's look at EXP, for example. You can't say that everyone, every real estate agent that works for EXP is a great real estate

agent, right? You just can't say that. But there are some teams. Just like you can't say that every EXP agent is a bad agent. Right. 100%. You cannot. You can't say that.

But there are some teams that are, you know, let's say with Keller Williams or EXP, that have really dialed in systems. The platform is. you know, the company provides the platform, but the teams inside have really dialed in systems. And it's up to that team. And that's why, you know, the loan officer is the face of it because they make, they are the ones that really structure that team, put that in place with the right processors, the right underwriters. Some of them have them in-house. Some of them have their own in-house processors that are directed specifically for their team. And they create a well-oiled machine to make the system flawless.

So that is really what when people like, well, what makes a good loan officer? Oh, you know, who has the lowest rates? Okay, that's something that can help. But a lot of times that means that they can't afford to have the really good oil, you know, the dialed in oiled machine that makes your, you're a loan flawless. And another thing to take into consideration is a good loan officer should be a really good salesperson because they should be assisting the agent on selling your loan, selling your deal. And so if a lot of people will go with, you know, the,

the company with the lowest rate and they are a call center lender. So the loan officer doesn't actually exist. It's just a call center rents, wash, and repeat. They really don't care about you. And no one's going to call the listing agent and give them any updates. Well, you have to remember, that's who's getting you the house. So if your loan officer is calling the listing agent and saying, hey, my client is super well qualified, I'm going to close this loan in 17 days.

And if I'm late, I'm going to offer you a per diem. you're probably going to get the house, which matters a lot more than, to me, matters a lot more than the interest rate if it's a good deal. So I think a lot of, especially a lot of first-time homebuyers that are very scarce in their mindsets will go straight to, well, I just got to shop around. I got to get the lowest rate. And that's typically going to be with the companies, the biggest companies that have the lowest overhead, because that's how companies work. They need to make their profit somewhere. So they have the lowest overhead, which means they have the worst service. typically. I'll just say that as, as, you know, that's what typically happens. I'm not saying that the

highest rates have the best service, because that's definitely not true as well, but it's not the only thing that matters. So a good, a good loan officer should have a really dialed in team and you want to ask them about their systems. And they also should be able to help sell your, sell you as a client to the listing agent, if that makes any sense. So I just, I want to, I wanted to put that out there because a lot of people look for some of the wrong things because a mortgage is just a mortgage, right? It's just, it's just financing. But to get into a transaction, that's a whole other story. There's another aspect to it.

And there is a good bit of sales that goes into that. I'm glad you said that because that's what I was going to say is, is ultimately Mindy's right. It is the listing agent, which is why if your agent and lender can't sell the VA loan and can't articulate why things are misrepresentations or misunderstood and what the actual case is, I mean, John was literally guaranteeing per diem if he didn't close an X number of days. And I mean, I don't want to mess mess up numbers. So I'm going to just say ballpark.

I think John closed close to $20 million in mortgages last year that I sent him. And I don't think he and he never, he never paid the per diem on. And so like it's, you know, it's all about having a team that actually knows what they're doing and specializes in something like that. Otherwise is like, yeah. I think it was around 20 from just from you that you sent over. Yeah, I wasn't trying to short, short change you are. All right. Okay, we get it. Have you read this book? Ego is the other. I was like, yeah, got a lot of clients. Well, Ed, what other thing I want to point out is the difference in rates is like an eighth of a point. It's not like you're quoting me five percent when everybody else is quoting me two and a quarter.

Yeah, it's usually comparable with similar companies. So, you know, you go from company to company, it'll typically be pretty comparable. quarter percent, you know, three quarter. Like, I rarely see a one percent difference. That would be pretty extreme. I rarely see a quarter percent difference. I mean, we're really talking about splitting hairs on these things. And some people will do that. I can give an example on a property that I sold and just kind of the mindset of a seller,

which a lot of first-time homebuyers don't understand because they've never sold a house. But I just sold a house in Oceanside, who's an investment property. property. I had a couple of different offers. I didn't go with the highest one. I went with the one that I felt was going to close the best. And I knew that by lender reputation. And I actually, you know, have the benefit of having some background in lending. So I was able to look at their desktop underwriting approval and see that they had a lower debt to income ratio and higher reserves. So I was able to, you know, look at that and really understand, okay, this is the, this loan is going to be the most likely to close. Now, really, if the listing agent receives five offers and one person

calls them and says, hey, I'm going to close this deal. Watch me. And I'm going to give you a per diem if I'm late. They're going to be like, okay, I like that person. They may not be the highest offer. So you could save $10,000, $20,000 by going with a really good team just because they called and they sold you as a client. So a lot of people missed that factor and they're worried about the eighth of a percent that saves them $20 a month when they could save $20,000 just by getting their offer accepted. John, I have a question for you about mortgage fraud. In most residential loans, it says that I, the borrower, must move into the property within 60 days. Yeah.

That's not extendable. That's 60 days. That's like a law or a rule or something. I've never seen it longer than 60 days. But in one of my real estate Facebook groups yesterday, somebody was saying, oh, just write up a longer lease. And everybody was jumping on this person saying, no, that's a mortgage fraud. It's mortgage fraud.

If you sign a document that says, I promise to move in within 60 days, and then you don't move in within 60 days and had no intention to move in within 60 days, I think it's different. Like, I bought from David and then he wouldn't move out. That's different. I'm not talking about that where you're unable to move in. because of circumstances outside your control. I'm talking about like going in there. But also, you know, rates are going up.

I don't know if you know this. Rates are going up. They're five and a half today. And by the time this show comes out, who knows, maybe they'll be like 27%. But they're going up. So people are tempted to buy and just say they're going to live in the property, but then turn it into a rental.

And that's mortgage fraud. I want to talk about that because there's this, I think a lot of people, know this, but I also think there's a greater percentage of people who have no idea that this is actually a felony, punishable by up to five years in prison. I mean, it's a big deal. And you have this mentality where, like, if you don't know, you're like, well, what does it matter? I'm just lying to a bank. It's not like a real person. So I can get that. 30? Yeah, I could be wrong here. It's like I said, I have data dump some of the stuff from when I was in the mortgage world,

but I believe it was up to 30 years in a million dollar fine. So I could be wrong. Oh, that's been worse. It's not something to take lightly. And I have a really simple explanation for anyone that wants to play the line with mortgage fraud. It was my favorite line back when I was lending. A lot of people will come to me and they'll give me hypotheticals. So what if I were to do this? What if I were to do this? There's plenty of what if. And especially with veterans, they were always, well, if you intend, quote unquote, to occupy the property and it would drive me crazy. So there's a simple answer to this. Can you explain? what you're about to do to the FBI in court. If so, go ahead and try it. And if you're willing to

risk the 30 years in prison or the million dollar fine, then do it. Why not? Right? But the answer is typically it's not worth it for a 1%, 2%, even a 5% difference. So the real answer is so a lot of people will ask the lender, you know, well, what about? out if I do this? Is that considered mortgage fraud? And the lender's not going to be the one, the loan officer, I should say, is not going to be the one that's going to be interrogating you in court. It's the FBI. So if you can explain it to them and you feel good about it and you're confident that no one's going to think that you're doing any sort of mortgage fraud at all, then fine, then you're good. Okay, do it. I've had people that, you know, because I've had some clients,

especially in the military, they're like, well, I might get orders. I don't know, but I might get orders in the next six months to get somewhere else. There's something called getting hissed, and it means you're going to be told that you have to go somewhere else. It doesn't happen to everybody. It might happen. And I had clients that were like, I'm hesitant to buy a house because that could happen to me. And I tell them, you're fine. You're, you don't, you're intending to live in the property and you really are. And as long as you don't get hissed, you're going to continue to live in the property. So you're fine. And then I've had other clients that have come to me and they, you know, plan on never moving in the property. That's mortgage fraud. Or, you know,

leasing it out for another six months. There's a, there's, it's not black and white. It's, it's very obvious what's mortgage fraud and you know. And so if you can explain it to the FBI in court, then go ahead and do it. If not, maybe reconsider. Yeah. I mean, it's as simple as if you actually intended to live in the house and then something changes. Okay. But if you were planning on something changing before you like before you got the loan and you knew so an example that I've heard in my Facebook group where someone managed to get this okayed by their lender and they were like telling everyone it was a great strategy is this person had disability claim for back pain or or knee pain or whatever right and they bought a two story house and then like two months later they're like

oh my goodness stairs I can't do stairs I need to go into another house I can't occupy this house so they rented it. And it's like, okay, well, you have like documented history of that prior to getting the loan. So if anyone wants to come after you, it's going to be a pretty easy like, well, you knew that. So, so it's like if you know that you're going to play this game, then you're in the wrong. And if you know that you're going to live in the house and then something changes, anything changes. I mean, there's all kinds of justifiable reasons, assuming that you're in the right to live in the house, then you're good. It's easy. And the risk is not worth the reward at all.

Yeah. One more thing to add on that is people do get caught. Thank you. Like on this team, people get caught and people, I've seen it where people go to prison. So don't think that you won't get caught because you could for sure. Thank you for addressing that. Like you're, you, there's this kind of goes into another aspect of it. But you are trying to set yourself up for success as a, as a business owner or as someone

that's trying to gain financial independence if you're listening to this podcast. Do you think you're stepping in the right direction by committing fraud over a 1% interest rate, 2%, even 5%. No, follow the rules, play the game and you can make a ton of money. Okay, this is the second time that you've capped it at 5%. I'm capping it at a billion percent. I'm infinite percent. 100,000 percent. It doesn't matter the percentage. Do you know what it's like to be in jail? I don't and I never want to find out. I bet it sucks. Yeah, it doesn't sound fun. You don't get to do all the things.

Yeah. And then you're a felon for the rest of your life. So that sounds like terrible. But I'm really glad that you brought up that people get caught because that's another thing. You're like, oh, what are they going to do? Drive past the house. I don't know how they catch you, but they will catch you.

Not all the time. There's a lot of ways they can catch you. You think that they don't have any sort of systems in place that they can catch you committing mortgage. So wait, the FBI can't see what address you filed on your tax returns. Oh, hang on. Right. You said this was a primary residence, but you don't live there.

Hmm. Odd. And when you have a mortgage of 3%, 2%, you know, way back five minutes ago when they were that low, and then it changes, maybe that gives the lender more incentive to see if that's really your primary residence. I don't know. I'm not a lender. I just know that it's mortgage fraud and it's not worth it.

And I'm glad you addressed that. Thank you very much. Yeah. And again, don't miss payments because if you want to see if a lender is going to drive by your house, just give them a reason to. Okay, John, is there anything else that we should ask you before we let you go from this time? This was so much fun. I'm definitely going to have you back on the show.

No, I think I'm, I think, I mean, if there's any other questions that you guys have, then I'd love to answer them. I don't think, I think that it's impossible to go over every single aspect of lending and 60 minutes. It's very, it's a, it's a very intricate business. And I would just say that when you're, when you're, when you're reaching, out you can trust but verify but if you really are are interested you can look at guidelines so people don't do that enough like well my lender told me this well my lender told me this

why don't you just google the guidelines and you can find out for yourself and then you'll be a lot more resourceful as a person so I think that's the best advice that I could give anyone that's struggling with getting qualified for a loan and then if you're a little bit more on the advanced side where you you know you already own a couple of houses then maybe start looking at portfolio loans where they aren't, they aren't, you know, lending against your personal credit, you're using your personal financial statements. They're not on your credit report. They're not hurting your debt to income ratio. And you could save your debt to income for a primary residence with the lower interest rate. I think a lot of people, that's something that seems to be

missing in the financial space, at least what I'm seeing around bigger pockets is people don't understand the benefits of going into the commercial world once they have a couple of properties under their belt. You know, the first time, definitely take advantage of those agency-backed loans, but there's more products out there as well. Okay. So the end of the show, we ask, we're going to ask two questions today. What's your favorite joke to tell at parties?

And where can people find out more about you? All right. So what did one snowman say to the other snowman, Mindy and David? What? Smells like carrots. Okay. And where can people find out? more about you. Just general information, you can follow me on Instagram. My Instagram is

John Lallan 22. That's J-O-N-L-A-L-L-A-N-D-E, and the numbers 2-2. And then if you have any lending specific questions, you could always reach out to my old partner, J-L-A-Gos-2-E. And you could reach her at J-L-A-A-A-L-S-E-E-A-L-S-E-E. Great. And we will put all of these in our show notes, which can be found at biggerpockets.com slash money show 303. John, this was super fun. You're so good at this. I can't believe you've never done a podcast before, except David's, which doesn't count. No, it doesn't count.

This is fantastic. I'm so glad I finally got you on this show. This is super helpful. Thank you so much for your time today. I really appreciate you. Thank you, Mindy and David. I appreciate both of you. Okay, that was John Lal.

I don't think I ever said thank you, David, for introducing me to John in the first place. The whole reason that I know him is because of you. My client, Sean reached out to me and said, I'm having some troubles with a VA loan. And I'm like, I know a guy. Let me call him up. David, do you know any VA lenders? And you're like, John Lalonde. So I reached out to him and he's like, I can close super quick.

I'm like, well, we'll see. I know the VA loan's really tough. And then he did. And now, well, and then he was my go-to guy for the longest time until he left me. But he was a wealth of information. that whole recasting your loan or rescoring, I'm sorry, rescoring your credit score, that was really great information. I'm super excited for that and for just all the stuff he shared today.

This was a lot of fun. Yeah. No, he's phenomenal human being and did not disappoint on the show. And yeah, you actually threw enough business his way that he had to get licensed in Colorado just to keep up with it all. He wasn't at the time. And his company was like, you just need to get a license there because this is a lot. when you can do what he could do, I'm not shopping around. I don't need to.

He had the same or so close it didn't matter rates, great closing costs. And he could close in 17 days. I have other lenders are like, I might be able to close in 30, 35 days. I'm competing with people who can close in 20 days. I need to close faster than that. And then John's like, this week I can't close in 15. It's going to have to be 17. I'm like, okay.

That's okay too. As we say all the time, right? Real estate's a people game. It is. You really need to know somebody who can get you get the deals done. And he could get the deals done. It was awesome. From episode 303 of the Bigger Pockets Money podcast, he is David Paray from the military

millionaire group. And I am Indy Jensen saying don't open up any new credit cards when you're about to buy a house.