Financing Investment Properties – Good News For the Conventional Investors!

Fannie Mae is changing their rules regarding multiple mortgages to investors in order to help jump start the housing recovery. Their current policy of financing a maximum of four investment or second home properties has been changed to five to ten for properties purchased after March 1, 2009, whether or not Fannie Mae is the investor on the borrower’s other mortgages. The following are the new eligibility requirements:

Eligibility Requirements
· Limit of five to ten financed properties per borrower, with underwriting requirements including a 720 minimum credit score and 70-75% maximum LTV/CLTV/HCLTV (depending on the transaction and the type of property involved).
· Applicable to whole loan purchases or mortgaged backed securities.
· Lenders must use a special code 150 when they are delivering loans to investors or to borrowers for second home properties.

Reserves Requirements and Assignment of Rents

The following are the new Fannie Mae reserve requirements for loans on investment properties and second homes to borrowers with multiple financed properties:

One to four financed properties (including the subject
property):

· Two months of reserves on the subject property if it is a second home,
· Six months of reserves on the subject property if it is an investment property, and
· Two months of reserves on each other financed second home or investment property.

Five to ten financed properties (including the subject
property):

· Two months of reserves on the subject property if it is a second home,
· Six months of reserves on the subject property if it is an investment property, and
· Six months of reserves on each other financed second home or investment property.

Investment property borrowers must now execute a Multi-state 1-4 Family Rider Assignment of Rents Form 3170 authorizing the assignment of rental revenues to the lender. Fannie Mae is deleting the requirement for rent loss insurance though. For more information, visit Fannie Mae’s website.

Understanding How Investment Loans Differ from Typical Mortgage Loans

Investment loans differ from a typical mortgage loan on a primary residence. Since the money will be used for investment purposes, lenders usually require a larger down payment for one thing. The interest rate is usually higher as well. Investment loans are for shorter periods of time while the monthly payments are higher, but less money is paid in interest during the term of the loan.

Requirements for Conventional Investment Loans

Lenders require a title policy be purchased, an inspection be conducted and an appraisal be done on the property to make sure the property appraises. Every conventional lender will review the borrower’s current debt to income ratio, past credit history and ability to repay the loan.

Hard Money Lenders

Investor funding through hard money lenders is an alternative to obtaining traditional conventional financing for many investors these days. Hard money loans can be used for not only acquiring property but rehabbing and resale of single family homes. Hard money lenders look at the asset more than the borrower’s credit history and income so it is easier to get financing.

Hard money lenders are mostly other investors who have cash and are willing to loan to you as an investor. Finding them is not that difficult. The best way to find a hard money lender is to get a referral from another investor or friend or family member. In fact, you may already have a family member that is interested in loaning to you. There are many hard money lenders that advertise on the Internet as well.

The Basic Features of Real Estate Investing Loans

As a real estate investor, one of the things you think about constantly is how to procure real estate investing loans.

Real Estate investing loans will cost you money
It would be great if you could always have the money you need to invest in real estate. Wouldn’t it be nice to have a bank account filled with liquid money for your investments? Unfortunately, that’s not always possible.

One alternative is to use other people’s money. In fact, this is one of the key things we teach in our classes on real estate investing – how to find other investors who have the money, but don’t know how to find the investment properties. But, sometimes you have to get hard money – what’s called hard money loans.

Hard money lenders are mainly commercial lending organizations – those who deal solely with the real estate sector. The loans for real estate investing are mainly short terms loans.

These loans are generally known as hard money loans because they are available with stringent terms and conditions, higher interest rates, and upfront fees of anywhere between 3 and 10 points! (A “point” is a percentage point. “3 points” means that you are charged a fee that is 3% of the total loan amount).

Real Estate Investment Loans are Secured Loans
These short-term loans are secured (usually) by some sort of collateral that you provide. The interest rate is high – about 14-18%, depending on the current going long-term interest rates, but the loan is usually for only 6 to 12 months.

The idea is that you’re holding the property only as long as you need to fix it up and sell it for a profit. So, the amount of interest you pay on the loan is negligible when compared to the gain you have in equity of the property. Lenders however check the collateral before providing the loan.

They’ll gather information about you, such as tax returns, bank statements, and they may even take a look at the property. Once they assess the overall risk of the deal, they’ll decide on the fees they’ll charge. Most of these lenders will want to see your business plan as part of their risk assessment, so don’t expect to just walk in the door and ask for a chunk of money because you “found a killer real estate investment deal.”

There’s always some risk – on your part and that of the lender. But, most of the risk is yours to bear. They’ve always got your collateral to fall back on. You have nothing but your hard work and determination. That’s why we teach you to play the game the smart way — minimize your overall risk, find investors with money to play, and invest in real estate that makes sense.

Whether you’re looking at purchasing rental cash flow properties, rehabbing a home, or even multi-family apartments, it’s always a good idea to have a clear and concise plan. Real Estate Investing works when you understand your options. Hard money lenders are just one of many options, but can still play a role in your investment plan.

Hard Money Loans

Currently foreclosures are skyrocketing in Michigan due to the drop in real estate values. People who borrowed in order to buy their house are now owing more on their homes due to the total worth of their home declining.

For those who have received low-interest-rate mortgages (ARM) in the past are now having there ARM increasing interest rates which in return increases the monthly payments. The monthly payments are getting too high for some to handle. The current situation is a real estate investor’s dream. Real estate investors are now about to get homes very reasonably, but in order to do this the investor needs to have fast money.

The answer to this problem are “hard money” loans. They do not require income or credit checks. The loan is given on LTV which is Loan-To-Value ratio of the property. These hard money lenders usually lend up to 75% LTV. If you are planning to purchase these houses in order to “flip” them, lenders will let you buy the property and will give you extra cash for renovations. For a Michigan investment property, these hard money loans only go up to 50% LTV due to the economic times of the state.

Many bargain properties will be found at auctions which requires the purchaser to pay a deposit of a percentage of the house when the action is won. After it is won and the non-refundable deposit is made you will have about a month- 30 to 45 days to pay for the property; most likely by getting a mortgage loan. Conventional mortgages normally take longer than the 30-45 day range and this causes the bidder to lose their deposit made at the auction.The great thing about hard loans is that you can usually get them within a week or two. Thus, hard money loans are what most investors do unless they are wealthy.

Hard money loans are not made by banks. They are made by private investors so it’s important to have a mortgage broker. They will be able to work between you and the lenders so that they have good working relationships. At the end of the deal the mortgage broker charges a percent amount of the loan obtained. The only price that you personally will need to pay is for the property appraisal.

If you are looking to “flip” a house use “hard money” loans and make sure to have a great Mortgage broker to help you along the way.

Micro Loan Investing – More Than Just Charity

Micro loan investing is not just a way for rich philanthropists to help the needy and make themselves feel good about themselves, while still making a buck or two out of the poor.

The micro loan industry is no longer reserved to the very poor in developing countries in Africa, South America or Asia. Recently such programs have come into existence which operate within the developed nations such as the US and the UK. They have come about to service the needs of those trying to set up or establish their own business who for one reason or another are unable to obtain credit via the normal routes.

Typically the loans available small and range from a few hundred dollars up to a few thousand dollars and the terms of loans are often relatively short, usually around 5 years.

There are a number of charities and non-profit organisations that offer micro loan programs. In addition there is a small number of more traditional investment funds now offering these loans and advertising them as a form of ethical investment for potential investors.

Micro loans are typically available to only those that cannot obtain credit through the usual means. Perhaps the person is homeless, recently come out of prison or for one reason or another has a very poor credit history. In such circumstance the loan originator will perform a credit check on the applicant however much of the appraisal will be based on interviews with the applicant and assessment of their business plan.

As well as providing the money to start or help a small business many originators also offer a mentoring service that will provide advice and support to the loan holder, giving their business a greater chance of success and increasing the potential returns for any micro loan investors.

Unsecured Business Loans – Niche a Path For Successful Venture

Every business machine is funded to propel smooth. A consistent back up of fund is an essential fuel to run the venture successfully. An entrepreneur has to make himself/herself well equip with steady financial mobility. Fund deficit could erupt anytime for any purpose, you may feel an external financial help in case of failure of your own resources. So, here the concept of unsecured business loans makes you upkeep with your finances. You can go for the loan facility with a feasible business plan to substantiate your demands.

Basically, unsecured business loans are not secured against any kind of your fixed asset. However generally, your asset is kept as collateral that assures the loan repayment. It also helps you fetch a good amount of money. But scenario is outright different in unsecured loan provisions. You get the fund you need without any sort of pledging-placing. This facility helps you accomplish any of your business expenses. You can invest the granted amount on several heads like buying machinery for a plant, raw materials, acquisition of land, an office premises, paying wages and salary to the employees, etc.

Unsecured business loans help you obtain the appropriate sum for your business. The loans enable you to convert your effort into a successful venture. It niches a path for instant success in your career. For all that, amount under the provisions differs with the borrowers’ repayment capacity and with lenders lending profitability as well. Even then, a borrower of any financial class can take out a sum anywhere from £1,000 to £25,000. You find a viable source of fund that makes you possible to avail even the larger sum.

You can make the loan application online as well as offline, processing online is preferred though. A simple online application is made. The application is reviewed by your lender concerned. And later, a confirmation is made to you. You get the fund you require and invest as per your requirements.

So, unsecured business loans niche a path to get success in your business venture.