subject: How To Get Investment Property Loans In This Economy? [print this page] Purchasing investment real estate for the first time can be a uniquely gratifying and frightening experience that combined with the current tough lending economy will deter many new property investors who would like to enter the market. It is absolutely imperative to remember that this situation we find ourselves neck deep in is not permanent. It too shall pass.
You will not find a better time to buy than now, it is a definite buyers market, but it will not remain. However, before you can even purchase the property that you want, you will have to investigate investment property loans and get approved for one as well.
As you have probably heard, if you are paying any attention at all to the economic news, banks are in trouble and it is more difficult than ever before to get a home loan. However, that does not mean it is impossible to get a loan, it only means that your investment property loan may require more from you than it might have three years ago. You will find thousands of homes on the market, that have remained on sale for many months when you browse the local real estate listings. This is partly due to the banks showing more caution about whom they lend money to given the current economic climate has forced them to be vigilant.
What this means for you is that you need to have good credit. You don't need perfect credit, but if you want a decent interest rate on your loan, then you are going to need to have something better than 650 for your credit score and if you want a great interest rate you will need a credit score of 750 or more. As you can see, you must make sure that your credit report is in good standing and free of problems. Do not close out any old accounts and do not close out any long-term credit cards, even if you are not using them. Companies that give investment property loans will like at your long-term stuff as positives as long as you paid them or are paying them off.
You will require a down-payment for your property too. Yes, there are 100% financing investment property loans available, but they come at a higher interest rate and for homes below a certain monetary value. Also, you will have to pay mortgage insurance until 20% of your loan is paid off, which is one more debt you do not want to have.
Planning for your future is important and property is a great way to do that. You do however need to prepare for the understanding that investment property loans have changed from what they were just a two or four years ago and you need to be prepared to provide undeniable proof that you can pay the loan off on time every month for the entire term.
by: Thoriso Mashego
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