The Complete Guide to Locating and Profiting from Emerging Real Estate Markets: Everything You Need to Know Explained Simply by Maurcia DeLean Houck

Author:Maurcia DeLean Houck
Language: eng
Format: epub
Tags: Real estate, emerging markets, markets, profits, investments, housing
Publisher: Atlantic Publishing Group
Published: 2012-02-16T00:00:00+00:00

Qualifying for an Investment Loan

When you are looking for a mortgage for your personal residence, the procedure is relatively straightforward — a credit check and the verification of your income is all it takes to get your money. When the property in question is going to be used as an investment rather than a residence, the process is different, yet similar. Instead of determining if you can afford the mortgage based on your salary, the bank will want to see your plan for the property and whether you have the collateral and credit to back up your dreams of investing in real estate.

You do not need to double your income before you can afford a second property. What you do need is a plan for making an income from the property that will back up why you are investing in that type of property. The first loan will probably be the toughest to secure; after all, you are asking the bank to take a chance on your business skills and investing plan. Once you have one successful investment property under your belt, you will look much better to the bank for subsequent properties. Your loan will be classified as non-owner occupied (NOO) and will be subject to different rates and fees than that of a typical owner occupied property. The interest rate for a NOO mortgage will be higher than the same loan for a primary residence.

The ripple effects of the housing market collapse are still being felt throughout the industry and are affecting borrowers and lenders alike. At the height of the market, an investor could buy a property with little or no money down because the risk to the lender was very small. When a home could double or triple in value over the course of a few years, the banks had very little to worry about when writing loans. Putting money down — 20 percent or more — will lower your interest rate significantly because investment property mortgages are based on the loan-to-value ratio (LTV) of the property. That means that the more you can put down on the home, the better. If you are putting 30 percent down, you will get a much better interest rate than if you are trying to swing a loan with no money down. This is especially important for the new investor who does not have a successful reputation on investment rental or resale to prove to the lender.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.