Ever since the devastation of the economic and financial collapse of the Great Recession, both residential and commercial real estate prices have been on a steady incline. This means that not only is the real estate market surviving, it’s safe to say that it’s even thriving in many areas of the United States, such as in Texas for example. As such, it’s no surprise that Americans are back to buying home at similar if not faster rates than they were prior to the Recession. And for many real estate entrepreneurs, such as landlords and property managers, now is a great time to turn a profit by purchasing a property, renovating it, and renting it out to qualified applicants.
In order to make this happen, the services provided by real estate investment lenders, such as renovation financing and renovation lending, are needed. After all, most people who are interested in buying property in order to rent it out cannot afford to purchase the property outright with cash money, therefore loans such as hard money loans for real estate investors provided by investment mortgage lenders are necessary. Real investors, such landlords and property managers, can work with real estate investment lenders to achieve their goals and dreams of owning a rental property.
However before landlords and property manager dive head first into falling in love with a particular property, it’s important that they understand at least a little bit about the lending process. Having even a basic understanding will not only expedite the process and make it a lot easier and faster, but it’s also a form of personal empowerment.
Here are a few things that real estate investment lenders want people to know about the process of securing a mortgage, property, or renovation loan.
Make a nice down payment
Many people may not even realize or know this, but typically, most investment properties are not covered by mortgage insurance unless a minimum down payment of 20% is made. This is the only surefire way to secure traditional financing for most investment properties, and if you can put down even more, such as 25%, then it’s highly likely that you’ll qualify for an even lower interest rate. And in the event you don’t have the funds for a down payment, be prepared for a tough uphill struggle. It’s worth waiting and saving up the funds until you have enough for a sizable down payment.
Flex your credit muscle
Your financial health and well being is similar to your own personal health and well being in that it needs consistent maintenance and attention. So if your credit score is a little rough, do your best to get it back into shape or else you’ll be faced with higher interest rates when it comes to borrowing from real estate investment lenders. A score of 740 is ideal for the best interest rate. Any lower and you won’t be getting much bang for your buck.
Bank local
If your down payment isn’t as big as you’d like it to be and your credit history isn’t picture perfect, you have a far better chance of qualifying for a loan with real estate investment lender at your small, friendly, neighborhood bank as opposed to a national chain bank or another larger financial institution. Smaller, local banks tend to be a bit more lenient in terms of financing, and chances are they might already know you!
