As the economy continues to improve slowly many investors are now venturing into real estate market again and the seemingly low prices make it a good time to do so. As figures from the National Association of Realtors show, most metropolitan areas within the country are reporting lower median sale prices especially on existing single family homes. This is a trend that is likely to continue and in the process lure in many investors.
However, while prices are good you will it find it challenging to get quick and easy financing for your property. This is because the credit market has tightened making it very hard to secure loans for investment property. Investors are being scrutinized even more now than before making financing difficult but not entirely impossible. A little preparation and tenacity can however improve your chances of success and help you venture into the real estate market.
Since mortgage insurance won’t cover your investment property, have a sizable down payment. With at least 20% down payment you can secure a loan with them and if you can accumulate 25% you may even qualify for a better interest rate. Alternatively, you can obtain a second mortgage on the property if you don’t have the down payment. This will however be quite an uphill task. Besides, few lenders in the real estate market actually go for second loans on residential investment property.
Many factors notable ones being the policies of the lender you are dealing with and the loan-to-value ratio can influence the terms of a loan given towards an investment property. Therefore, you need to be a strong borrower. As an investor check your credit score before you enter into any deal. Such an aspect will greatly impact on the loan terms. If your credit score is below 740, you will incur additional costs for the same interest rate. You will now have to pay a fee to have the interest rate remain the same and if you can’t raise the fee, brace yourself to pay a higher interest rate. For Mortgage on Commercial Property and Investment Real Estate visit http://ColumbiaMortgagePlace.com – Mortgage Financing Columbia SC
As you look to venture into the real estate market and finance your investment property, note that reserves in the bank has also become an important factor in the lending equation. Most lenders need to know whether you can pay for all your expenses investment-related or personal for at least six months after acquiring the property. Even if you own multiple rental property, lenders will still want to see the reserves for each.