Bobby Cloud

Production Manager | NMLS 247321
Phone | Fax:
6031 Connection Drive, Suite 700, Irving, TX 75039

Mortgage lending is more than selling loans. It’s about helping people achieve their homeownership goals. Whether that’s helping them reach a better financial position or connecting them to the home of their dreams, it’s about guiding them to the finish line.

My industry experience has taught me to take the time to understand my customers: What’s their story? How can I help them in their pursuit of a home? When I see my customers as real people with real goals, needs, and dreams, I get to match them with the best loan product and create a truly seamless lending experience.

Everyone has a story to tell. What they need is a Loan Originator who will listen, customize a loan to meet their needs, and guide them every step of the way.

Causes I Care About

Saint Jude Children's Hospital

My Favorite Restaurant

Eddie V's

My Ideal Vacation Spot

St Thomas

My Favorite Pastime

Boating with the Wife

The Reviews Are In

"Insanity, doing the same thing over and over expecting different results"

— Anonymous

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How is an investment property mortgage different from a second home mortgage? Read on to find out.

WE ARE NOT PROVIDING TAX, FINANCIAL, OR LEGAL ADVICE IN THIS BLOG POST. THE DIFFERENCE BETWEEN AN INVESTMENT PROPERTY AND A SECOND HOME LIES ULTIMATELY IN THE IRS CODE. Investment property, rental property, second home, vacation home… After a while, these housing industry terms seem to blend. In reality, these terms are actually quite different, both in what they describe and the mortgage rules that apply to them. Searching for some clarity on the matter? This article should help. To find out how an investment property mortgage is different from a second home mortgage, we first need to explain how the properties themselves are different.


Let's talk about investment properties. Many people also call these “rental” properties, and for good reason. These homeowners make side income by renting out their investment property to tourists and vacationers (possibly even using services like Airbnb) or to more long-term guests like residents who pay rent. This kind of homeowner, however, does not live in their investment property—they have a different primary residence. Purchasing an investment property can be an attractive and rewarding investment for many reasons. For one, it helps diversify your investment portfolio—and for those who are into investing, you know that's a good thing. The money you make from renting your investment property can also be used as payment toward the home's mortgage, especially if it's steady rental income from a resident. Now that's a return on your investment. But, be warned, investment properties are not the easiest to manage. It can be hard work—particularly if you're housing a renter. At that point, you're not just property owner, you're also landlord and maintenance. Unlike renters, stocks and mutual funds don't pay rent a week late, irreversibly scratch your hardwood floor, or call you about plumbing issues in the middle of the night. It can be exhausting—not to mention expensive. You've probably heard the phrase “It takes money to make money.” Well, that's true for investment properties. You think renting out your investment property is going to be an instant cash cow, but for a while, in the beginning, it could cost you a lot of money. Don't forget this property will have a mortgage, taxes and insurance, and utility bills just like your primary residence. As with most financial decisions, there are many pros and cons. Always consult a professional financial advisor and/or legal counsel for guidance before you buy an investment property.


For some homeowners, their second home is their vacation home (or, as we say in the mortgage industry, their non-primary residence). Think of a second home as the place where you live during certain times of the year, like on the weekends, during the summer, six months out of the year, etc. This could be a beach house or a cabin in the woods. Some of these properties are in second home “communities” where most of the properties in the surrounding area are second homes. This is a different kind of investment—you may not rent it out (although you can), but more likely, you, your family, and your friends reap the benefits of an extra property that's all yours. And again, owning a second home requires work and comes with more bills to pay. It's more responsibility and more property to manage. You have to clean it, maintain it, and ensure its year-round safety and security. Like an investment property, buying a second home is a big decision that demands preliminary legal advice.


Now that we've covered the differences between these two types of properties, let's address the differences between an investment property mortgage and a second home mortgage. An investment property mortgage is what we call a business purpose loan—a loan for a non-owner occupied rental property. Mortgages for investment properties tend to come with higher interest rates and often require larger down payments. These two factors are designed to protect the lender in the event that the borrower fails to pay their investment property mortgage. Most lenders consider these types of home loans to be riskier simply because, since the home buyer doesn't live in this home, they might be more inclined to walk away in the event of financial adversity. Lenders believe that a borrower who has invested quite a bit of their own hard-earned money into their property upfront will be more likely to keep the property—and continue paying the mortgage—even in financial crisis. A second home mortgage is different in that you're more likely to see interest rates and down payment requirements similar to that of a primary residence. If you plan on living at this property for at least 14 days out of the year, it's considered a second home, and would need a second home mortgage. We know what you're thinking. Why not apply for a second home mortgage, use it to buy an investment property, and reap the benefits of a lower interest rate and down payment? Think again. Lenders are smart and their staff is trained to notice this sort of activity. It's called mortgage fraud and, if you're caught, you could face some serious fines. Since living at the property for at least 14 days out of the year is the deciding factor between an investment property and a second home, it's one of the first things underwriters look at when assessing the loan. Take it from us—honesty is the best policy.

We’re always working to provide you with information that can help you make educated homeownership decisions. Did you learn something new by reading this article? Share your thoughts with us on social media!

Ever wondered what affects your credit score?

Credit score. It's a topic that's widely discussed in the financial industry but it's also one that's hazy or even confusing to many people. Have you ever wondered just how well you know what affects your credit score? Whether you're a first-time home buyer who's unfamiliar with the rules of credit scoring or a weathered mortgage borrower who could use a refresher, read on to learn a thing or two about what affects your credit score.


Your credit score is your credit activity and history represented as a three-digit number. Credit scores can range from 300 to 850, and the higher your score, the better. Your credit score tells a lot about your financial history. Types of credit that can be reflected in your score include auto loans, home loans, student loans, credit card debt, etc. Your credit score paints a picture of how responsible you are at credit management and expresses your financial stability in a simple figure. It helps lenders determine your creditworthiness—your ability to pay back the money you borrow.


You may have heard your credit score being referred to as a FICO score: FICO (which stands for Fair, Isaac, and Company) uses predictive data analytics to generate the most accurate credit score. This helps lenders predict a consumer’s behavior. Using the FICO scoring model, Equifax, Experian, and TransUnion—the three major credit reporting agencies (CRAs)—generate your score based on your credit information. You may notice that your score is not exactly the same across all three CRAs—don’t worry, this is normal. Not all lenders and creditors report to all three CRAs, so although each score varies slightly, when combined, they represent your total credit score.


Credit score is very important when it comes to mortgage lending. We look at a borrower's credit score to see if they have a track record of paying bills and repaying loans on time. Like we said, the higher your score, the better—but also, the higher your score, the more qualified you are to borrow again, and the more favorable terms you're eligible for. Conversely, the lower your score, the less favorable the terms available to you may be. If your score's too low, you may not qualify for a loan at all.


So, when applying for a mortgage—or any type of loan, for that matter—what affects your credit score? Let's take a look at the five major factors to help you understand just what affects your credit score. 1. The length of your credit history. This aspect of your credit score shows how long you've been using credit and makes up 15% of your score. A long history of on-time payments is excellent—you don't want to have a long history of late payments as this can negatively affect your credit score. Haven't had credit for long? A short credit history isn't a problem as long as it shows you've made payments on time. 2. The variety of credit. In determining what affects your credit score, lenders also look at how many different types of credit you've opened (sometimes called your credit mix). This accounts for 10% of your total credit score. Do you have auto loans, an existing mortgage, student loans, credit card balances, or another type of credit? How many of these do you have in total? Answers to these questions can affect your credit score. A variety of credit is good, but you don't need one of every type of credit in order to have good credit. 3. Your payment history. Accounting for a whopping 35% of your credit score, payment history is a major component. It may not come as a surprise to you that a history of on-time payments is a good thing. It helps prove that you can be trusted to pay back the money you borrow. Have you ever received mail from your bank or credit card company stating that you're eligible for a higher credit limit? That's usually a good indication that you're responsible with credit and you generally make payments on time. As part of your payment history, your credit score can be affected by late payments. If you've paid late, how late? Have any unpaid bills gone to collections? If so, this might tell a lender that you don't have plans to pay them back if you borrow from them. In addition, special cases such as bankruptcy or foreclosure can have adverse effects on your credit score and may even disqualify you for a mortgage. (Good thing Cardinal Financial offers a loan program to help borrowers with derogatory credit events qualify for a mortgage.) 4. Your remaining balance. When you think about what affects your credit score, probably one of the first things that comes to mind is how much you owe. That makes sense, because this makes up 30% of your credit score. It's not just about how much you owe in total, but how much you owe on each line of credit. (How much you owe per type of credit matters too.) This factor also considers how much of your total available credit you've used. Remember, it's best to demonstrate an ability to repay, so the lower your remaining balance, the better. 5. New credit you've taken on. The last 10% of your credit score is determined by the new credit you've taken on. This includes the types of new credit you've opened, how many lines of new credit you've opened, and if you've opened multiple lines around, roughly, the same time. Several new lines opened in a short amount of time may indicate that you're about to take on a lot of debt, which may threaten your chances of loan approval. Let's say you're planning to buy a home. You take out a credit card at Home Depot because the house you've got your eye on needs some renovation, you take out another credit card at Sears because you want to buy some big-ticket appliances, and you open up another line of credit with Art Van Furniture to finance a brand new bedroom set for this new home. When a lender sees this type of activity, they may think you're getting ahead of yourself—you're putting items on credit that you can't afford before you even buy the house they're intended for. If you just opened up a lot of new credit, a lender will see it and may think you don't have the money to pay for all of these things—and their loan is one of them. We hope this article helps you figure out what affects your credit score. This blog post is not intended to provide credit or financial advice. We recommend you consult legal counsel or a financial advisor when making decisions that may affect your credit.

Did you learn something new about credit scores from this article? We want to know! Share this on social media!

Don't look now, but Millennials are buying houses and breaking barriers.

They said it couldn't be done, but the same Millennials who analysts deemed destined for a lifetime of renting are not only coming around to the idea of homeownership, they're powering the housing market! According to the NAR's 2017 Home Buyer and Seller Generational Trends study, Millennials were the largest group of home buyers (34%) for the fourth straight year. A far cry from their public perception as supermobile serial renters. Millennials may be the youngest generation of homeowners, but they're also the largest and the most diverse. There are 83.1 million Millennials nationwide, and 44.2% are part of a minority race or ethnic group, meaning the increase in Millennial home buyers doesn't just signify economic progress, it shows social progress as well. There's been a wide disparity in homeownership rates between whites and minorities for more than a century, but with the upswing in Millennial homeowners, that gap is starting to close.


The uptick in Millennial homeowners is indicative of the continued “integration” of communities. For years, minorities were barred from purchasing homes in many neighborhoods through government-enforced policies. Banks were legally allowed to deny federal loans to minorities and racial covenants in certain neighborhoods prevented homeowners from selling their houses to people based solely on the color of their skin. Legal discrimination denied minorities access to basic necessities that many people take for granted, and the effects of this discrimination are still visible today. The diversity of the Millennial generation will only expedite the diversification of American communities and provide access to resources that were denied to minorities for so long. Along with the rise in Millennial homeownership comes a rise in economic growth and wealth-building opportunities for minorities. Many minority families lack the generational wealth that many white families have accrued over time due to the systemic discrimination of the 20th century. Owning a home plays a huge role in a family's economic growth and can be a method of generating wealth to pass down to future generations. The gap in wealth between whites and minorities is even larger than the gap in homeownership, but Millennial buyers are seeing to it that these numbers gradually come closer together.


For all the negative press Millennials get, they deserve some credit for unapologetically moving at their own pace. Sure, they were notably slow to enter the housing market, but they're also marrying and having children later than past generations. If anything, the delay in home buying has given Millennials time to get their lives together, start families, and save money before taking on such an important investment. Their sudden interest in homeownership has paid dividends, not only in the economy, but in society as well. Throughout history, minorities haven't been afforded the same opportunities as the majority, but Millennials are looking to even the score.

Are you a Millennial who's thinking about getting on board with the home buying movement? We'd love to help! Give us a call and let's get started.

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