Need advice on getting pre-approved for a loan for investment property

[dare2dream 0]

Hi,

 

I own a pre-construction property in Florida, I am not sure if it's going to be my primary resident as of yet - I would like to be able to choose to have it as an investment property if i so wish - but when i talk to mortgage brokers or banks ...they all give me a hard time about a loan if it's for an investment property.

 

I have a 720 credit score, I am employed...from those i have spoke to they are saying if it's an investment property I need to put 20% of the purchase price down on the house and on any investment property.

 

Is this the case with all mortgage brokers/banks. I hear people getting loans all the time for their investment properties and they don't have the 20% cash to put down on these properties...and they own several properties.

 

How are they doing this?

 

Appreciate any advice.

 

Revital

[MichaelC 160]

Hi dare2dream, and welcome to The Naked Investor.

Generally, not every lender is going to punish you because you are an investor and the property is not going to be owner occupied. Like all things, it's buyer beware when shopping for financing. In this day and age, 20% down for a loan, even an investor loan, is out of touch. Find yourself an experienced and investor friendly mortgage broker. Remember when you shop around that you are paying them, and they work for you. Don't let anyone intimidate you. Find someone you can connect with and feel comfortable with.

We have a few good ones right here on our board in the Funding Forum. Mike Pine comes to mind.

[mpine 0]

Hello Revital,

 

There are many investment products that can produce great rates with 10% down, and other programs that can go as low as 5% down. There is a whole lot that goes into deciding what the best product is for each individule. I have had investors and homeowners put down less when they have more urgent needs for their property (ie. repairs, additions, remodelling) and could afford to pay a little extra in the rate to have the extra money now.

 

If you like you can contact me and we can see what the best program for you will be, or you can visit my pickyourloan.com website in my signature and go through the application process and I can call you to go over your options after it is priced out.

 

 

To All Your Successes,

 

Mike

First Source USA

 

PS. Hey MC, thanks for the kind words, right back at ya! I owe you a brew and shot of whatever you like next time your out my way or I am out yours.

[MichaelC 160]

PS. Hey MC, thanks for the kind words, right back at ya! I owe you a brew and shot of whatever you like next time your out my way or I am out yours.

Be careful what you put in writing, Mike. Now I'm going to hold you to this next time we cross paths!

[mbroker 0]

There are still a few lenders that offer 100% N/O/O financing. However, the rates on those programs are not very pretty. If you are rate driven, then you want to keep the LTV as low as you can. On the other hand, if it is about the cash then a 100% loan may be of benefit.

[Investment Loans 0]

As previously mentioned, there are several lenders that still offer 100% financing. With your score you should be able to qualify for a stated or no ratio loan. This means that you have to have at least a 2 years solid work history and at least 6 months of reserves. 1 month of piti (principal interest taxes insurance) = 1 month of reserves. Those funds have to have been in your account for at least 2 months.

 

One of the biggest issues that comes up with high ltv financing is when a lender sees a negative cashflow. After calculating the vacancy factor, mortgage, and expenses...the rent may not be sufficient enough to qualify. This is due to the higher rates as already mentioned. If you're buying the property substantially below market value then you may be ok.

 

These are the types of deals that mortgage consultants specialing in investment loans handle.