Ask Smart, Borrow Smart

When considering an investment property, choosing the right mortgage lender is one of your most critical decisions. We’ve guided countless investors through the lending process at Henderson Investment Group.

Over the years, we’ve learned that asking the right questions—and avoiding the wrong statements—can set you up for a seamless loan approval experience and ensure you get the best terms possible.

Why Communication Matters

Working closely with your lender isn’t just about signing paperwork. It’s about building a relationship founded on trust, transparency, and mutual understanding. You can secure favorable financing that aligns with your investment goals by asking informed questions. At the same time, knowing what topics to avoid can help you maintain a positive rapport and instill lender confidence.

Top Questions to Ask Your Lender

Learn which questions to ask (and which to avoid) to secure a hassle-free loan for your next investment property….

1. “What Types of Mortgage Loans Do You Offer?”
From conventional mortgages to FHA, VA, and USDA loans, it’s essential to understand the available options. Some investors may also benefit from specialized loan products. At Henderson Investment Group, our clients often appreciate turnkey approaches that align with their current assets and growth strategy. Understanding each loan type’s qualifications allows you to narrow down which best fits your portfolio goals.

2. “What Repayment Terms and Rates Are Available?”
Clarify whether a fixed-rate or adjustable-rate mortgage (ARM) better suits your long-term plan. While a 30-year mortgage is popular for lower monthly payments, a 15-year term might save you thousands in interest. Don’t shy away from details—ask about interest rates, annual percentage rates (APR), and how your credit score affects those figures.

3. “What Upfront and Ongoing Fees Should I Expect?”
Beyond the interest rate, you should be fully aware of all associated costs, including closing costs, origination fees, and possible prepayment penalties. Understanding these expenses can help you accurately estimate your ROI and ongoing cash flow, ensuring you choose a property that supports your investment goals.

4. “Do You Provide Preapproval, and How Does It Differ from Prequalification?”
A preapproval is more robust than a prequalification. Preapproval requires documentation and verification, giving you stronger bargaining power when you offer a property. Sellers will appreciate knowing you’re a serious, vetted buyer.

5. “Is Mortgage Insurance Required, and Can I Avoid It?”
Mortgage insurance (PMI or MIP) can significantly affect your monthly costs. Ask whether you can dodge or reduce this expense by making a larger down payment, improving your credit profile, or exploring loan programs that waive insurance under certain conditions.

6. “Are Down Payment Assistance Programs Available?”
Some lenders participate in state or local down payment assistance or matching programs. If you’re exploring ways to minimize upfront costs, ask your lender which options are on the table. Henderson Investment Group encourages investors to explore these programs if they help secure favorable terms without compromising long-term returns.

7. “How Long Does the Loan Process Usually Take?”
Timelines matter, especially if you’ve identified a high-potential rental property. Knowing how long it will take from application to closing helps you plan showings, inspections, and renovation schedules. A clear timeline ensures you synchronize your property acquisition with your overall investment strategy.

8. “Will You Service My Loan After Closing?”
It’s not uncommon for lenders to sell servicing rights. Knowing who handles your payments and account management after closing can simplify your life. If you prefer working with one entity for the loan’s duration, make that clear upfront.

What Not to Say to Your Lender

Knowing what to ask is just as important as understanding what not to say. Certain remarks can raise red flags and potentially jeopardize your approval.

1. Avoid Dishonesty at All Costs
Never provide inaccurate or misleading information about your finances. Lenders verify details, and dishonesty can lead to immediate denial—or worse.

2. “What’s the Most I Can Borrow?”
Asking for the absolute maximum suggests you haven’t considered your own budget constraints. Instead, apply the 28/36 Rule: spend no more than 28% of your monthly income on housing and 36% on total debt. Henderson Investment Group emphasizes sustainability and long-term stability. Only borrow what makes sense for your cash flow and future plans.

3. “I Occasionally Forget to Pay Bills”
Late payments appear on your credit report, whether you mention them or not. Highlighting poor financial habits may scare off lenders who fear you’ll struggle to handle mortgage payments.

4. “Check Out My New Credit Cards!”
Taking on new credit right before closing can disrupt your debt-to-income ratio and credit score. Wait until after your loan is finalized to open new credit lines or finance big-ticket items for your investment property.

5. “Which Credit Card Isn’t Maxed Out?”
High credit utilization suggests instability. Lenders often re-check credit before closing, so keep your balances in check.

6. “I Switch Jobs Every Year”
Frequent job changes can indicate instability. Aim for at least two years of steady income in the same field to reassure lenders.

7. “I’m Transitioning from a Salary to Commission-Based Income”
Lenders value predictable, documented income. A sudden move to variable pay may cause them to reconsider approving your loan.

8. “I’m Getting a Cash Gift for the Down Payment, No Problem, Right?”
Gifted funds are often allowed, but rules must be followed. Before using them, talk to your lender about documentation and compliance.

9. “How Does Foreclosure Work?”
Asking about foreclosure at the start signals you’re already concerned about defaulting. It’s better to focus on positive strategies that ensure stability.

10. “What Is a Credit Score?”
Investors should have a working knowledge of credit basics. At Henderson Investment Group, we educate clients about credit health before they apply, ensuring they’re positioned for success.

Final Thoughts

Securing a mortgage for your investment property can be a smooth, rewarding process if you know how to engage with your lender. By asking informed questions—like the ones highlighted above—you’ll gain clarity, secure better loan terms, and demonstrate your credibility as a borrower. Just as importantly, avoid statements that suggest instability or financial uncertainty.

At Henderson Investment Group, our mission is to make real estate investing as seamless as possible. Let us guide you through every step—from property selection and financing to renovations, marketing, and long-term management.

Request a private consultation or start browsing investment properties if you are interested in learning more!