Real Estate Investment Loans

The current housing crisis has driven many homeowners looking for other types of real estate investment loans. However, not only are the homeowners affected by the current housing crisis, investors are being impacted as well. Not all real estate investment loans deal with getting a loan to live in a house. Some invest in real estate for the primarily purpose of renting them out. Other big investors will invest in real estate to build commercial or industrial buildings such as offices and retail. Anyone who isn’t buying real estate in cash will look for ways to finance their real estate adventure.

Real estate investment loans come in a wide variety of flavors for different investment needs. Traditional, seller carry back, subject-to, seller second, lease option and finally property purchase planning are all different types of real estate investment loans made available to the public. In order to determine what type of real estate investment loan is best for you, you must take the time to see the many differences between real estate investment loans. People who are interested in simply financing a home can apply for a traditional real estate investment loan. Because of the recent housing crisis, it may be difficult to qualify for these loans.

Investors should stay away from real estate loans that are exotic or that can fluctuate in the future. Fixed real estate investment loans are the most secure when investing in a home. However, obtaining a traditional loan will require a credit score of at least 680. Seller carry back involves creative financing methods that investors need to be aware of. Instead of a financial institution carrying the note, the seller carries the note. The seller can also require the buyer to pay the full price of the real estate within one to five years. This process allows a new buyer to get their foot in the door for a home loan. It’s always easier to refinance than it is to qualify for a new home loan. Especially if you’re a first time buyer or have below average credit.

A subject-to real estate investment loan is a way to get into real estate fairly quickly. Buyers purchase real estate under the stipulation of the existing loan. In other words, the buyer must follow the guidelines of the loan agreement that is in place already during financing. This type of loan is primarily designed for a short term solution with selling or buying real estate. Even though the seller has sold their real estate to the buyer, their name remains on the loan. The agreement, however, is for the buyer to continue to make payments accordingly. Most sellers don’t feel comfortable having someone else pay a loan under their name.

The seller second real estate investment loan is a type of loan that is used quite often. This type of loan allows the seller to utilize a second mortgage that can be used for the down payment for the buyer. If the buyer doesn’t have enough funds to cover the down payment, the seller can then pull a second mortgage out of their loan and gain their equity back in full as the down payment. The buyer purchases the home but the seller carries the note. Note all sellers qualify for a second mortgage.

Lease options are for people who don’t have enough income to purchase real estate. However, people can utilize the lease option to get into a home or real estate with a low down payment or in some cases no down payment at all. The lease option also allows the buyer to finance their lease at a later date. There are many different ways to invest in real estate and finding the right real estate investment loan is easy with some research.

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