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Fintech Lender SoFi Just Started Making Investment Property Loans


Jan 19, 2021 by Matt Frankel, CFP
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SoFi, short for Social Finance, has been in the news lately because of its recent announcement to go public through a merger with a special purpose acquisition company, or SPAC. However, many people missed the announcement that SoFi decided to open up its mortgage lending operation to investors.

If you're in the market for an investment property mortgage, or if you might be shortly, here's a quick overview of what SoFi is and how its mortgage platform aims to make the process as efficient as possible.

What is SoFi?

Social Finance, better known as SoFi, is a financial technology start-up that initially made private student loans. Over the years, the platform has expanded to offer personal loans, credit cards, a stock trading platform, and most important for our purpose, mortgages.

The general idea behind SoFi's business is that the company aims to eliminate pain points from the consumer finance process. SoFi's underwriters take alternative information into account to help borrowers who have difficulty qualifying with other lenders to gain access to loans. For example, SoFi considers vested restricted stock units (RSUs) as income -- a common type of compensation among tech sector workers. SoFi is also much more accommodating than most lenders when it comes to evaluating self-employment income.

Also, although many SoFi borrowers only get one product (like a personal loan), the platform is intended to be a financial community. There are member meetups (in non-pandemic times), services like career coaching, no-cost financial planners available to members, and more.

SoFi's target customer base is high-income individuals whoare either underserved by traditional financial institutions (self-employed individuals are a big part of SoFi's business), or who simply don't like the inconveniences and fee structures associated with branch-based lenders.

SoFi Mortgage

You can read a thorough review of SoFi Mortgage on The Ascent, which is The Motley Fool's personal finance website, but here's some basic information.

SoFi's mortgage application process is entirely online, and the platform can even connect your application directly to your other financial institutions to pull required statements and documents. The company offers mortgages with down payments as low as 5% (although not likely for investment properties) and offers jumbo loans as well as mortgages with conforming balances. If you're currently a SoFi member, you can get a $500 discount on the mortgage origination fee.

Unlike many other lending platforms, SoFi only offers conventional mortgages. It doesn't offer FHA or VA loans (although these aren't used by investors anyway). Borrowers can choose mortgage terms of 10, 15, 20, or 30 years, all of which come with fixed interest rates. And like many online-based lenders, you can check your rate and loan offers on SoFi's platform with no effect on your credit score.

The Millionacres bottom line

SoFi Mortgage is a high-tech mortgage lender that has been a favorite of homebuyers and refinancers for some time. Now, investors can take advantage as well.

To be clear, I'm not necessarily saying SoFi Mortgage will be the best choice for your next investment property. It's entirely possible that you'll find a lower interest rate or better terms through another lender. But this lender has very high ratings and could be worth a look when you start to shop around for your next investment property loan.

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