Real Estate Financing – Creative Financing Tips
This year, Americans are expected to borrow $1.33 trillion in acquiring 7.4 million houses, condominiums and co-ops. Before you do any real estate financing, if you have bad credit because of consumer debt like credit cards or personal loans, you’ll want to try to eliminate or reduce this debt since it will affect your ability to qualify for a commercial or home mortgage and make the estimated monthly payment. If you have monthly obligations like car payments, credit card payments, personal loan payments, student loan payments, etc., be sure to take these into account when you are determining your bottom-line affordability figure.
If rates in the current market are high, you’ll probably get a better price with an adjustable-rate loan. A fixed-rate mortgage means that the interest rate and principal payments remain the same for the life of the loan but the taxes may change. Loan programs for down payments of 20% or less require that you purchase Private Mortgage Insurance (PMI).
Interest rates may go up if a rosy picture is painted that the economy is flourishing – like more jobs being available; this can lead to inflation which will send the rates up. You’ll also need to consider closing costs and the escrow account for your taxes and insurance. Also keep in mind when you’re financing or refinancing that most people move or refinance within seven years.
Most of all you’ll need to decide what you can afford to buy. And if a loan application isn’t approved for the first time, it can always be resubmitted after modifying it, for example, like raising the amount of the down payment. If you’re a first-time home-buyer it is possible that you may qualify for a lower down payment or lower interest rate; check with mortgage brokers, online mortgage companies, your county housing department or your employer to see if they know of any programs like this available.
Revealing a FICO credit score is not a requirement for most conventional or government loans like FHA loans or VA loans. Thirty-year fixed-rate mortgages offer consistent monthly payments for all of the 30 years you have the mortgage; if the market is good, you can benefit from locking in a lower rate for the full term of the loan. 15-year mortgages are an ideal option if you can handle the higher payments and if you’d like to have the loan paid off in a shorter period of time, for example, if you plan to retire. Read more
Creative Financing For Real Estate Investors
If you’re an experienced or novice real estate investor, you have many options available for financing your properties. One widely used method is having multiple loans. This is usually a second mortgage. For example, the buyer puts up a percentage and effectively borrows the negotiated balance on a separate loan.
For many years most people financed a property with 20% down and 80% on loan. Some even put MORE down. But 20% was considered the minimum. And fortunately many things have changed over the years.
And while it’s great to use less cash for the same property, the downside isn’t limited to the higher rate on the second note. You’ll find that lenders almost always require PMI (private mortgage insurance) if the buyer doesn’t meet the standard 20% minimum. And the fees can be unattractive.
It’s “possible” to have the lender remove the PMI after a certain number of payments have been made. But it rarely happens. Here’s the theory…
Once the loan has been paid down so the LTV (loan-to-value ratio) is at the 80% mark, this is usually the combination of paying down the second mortgage and the property value appreciating, the lender will consider removing the PMI fee from your monthly payment. Read more
Creative Financing For Homeowners With Bad Credit
A few creative methods can help anyone with bad credit to improve their ability to purchase a home, to refinance a home or even to use their home’s equity. There are many lenders that are willing to provide loans to those with poor credit especially when those loans are secured by the value of your home. It is essential to remember, though, that mortgage lenders are not in the business of owning homes and therefore don’t want to find that they have to foreclose on the loan that they provide.
3 Big Considerations For Bad Credit Buyers
Consider these three things while you are looking for a loan when you have less than perfect credit.
1. Don’t make mistakes or exaggerations on your income, your credit history or any other information requested. Being up front and honest with lenders will allow them to find lending options that are available to you.
2. Sub-prime lenders are available to provide homeowners with debt consolidation loans, with refinances of their current mortgages or even additional loans. Yet, you will pay for it with higher interest rates. Because they are taking on more risk, the interest rates are higher to you. Read more
Government Grants For Real Estate Investing
If you?re looking at buying a house or investing in property and real estate, the U.S. government is a source for getting the necessary money for it. Being rich or poor is not the criteria for getting these government grants; it is awareness of the grant programs that are available that is most important.
Many people do not know about these grants that the Federal government is giving away. It could be for funding women?s issues, entrepreneurs, office rentals or real estate financing. Real estate investment includes homes, land, offices, hotels, and industrial, mini-storage and retail properties. There are a number of personal assistance companies who will walk you through the red tape required to receive these grants. You can get as much as $8,000 to $800,000, or even millions, to buy real estate. They also provide information about the inside workings of a government financial venture, new developments and loan grants. They can also aid you with direct applications for these grants. Low interest rates have made these loans easier to obtain, regardless of past bad credit or your income.
Government grants have made it easier to be able to buy that dream home or invest in real estate. The grant opportunities for real estate are vast. Homes for AIDS patients, public housing, rural community developments, housing repair for very low income groups, tribal universities, and Hispanic housing are a few among the many. There are also times that the government puts up land for sale to the public when it no longer requires it. This is the kind of real estate that is identified as excessive for the government’s needs, and is considered more suited for private needs. Read more
Grants for Investing in Real Estate
By now, we have all seen the commercials shouting that you are a fool for not taking advantage of the government grants available for everything from starting your own business to investing in real estate. Does it sound too good to be true?
That depends. Certainly, some people have received a grant for investing in real estate. A very few have received a large grant for investing in real estate. And even though these grants exist, the requirements can be quite stringent, the competition very tough, and the amounts small.
However, there are some circumstances where it is possible to start or improve a real estate investing career by seeking and obtaining grants. Most often, local municipalities fund affordable housing initiatives. These may range from offering individuals grants to assist in a first-time-homeowner down payment, to grants to non-profit developers to build multi-unit affordable housing developments. Read more
Grant for Investing in Real Estate – An Overview
How would you like to obtain a grant for investing in real estate? You can, and it may be easier than you may think!
There are several types of grant for investing in real estate. Which ones you choose to apply for depend on the types of properties you are interested in purchasing.
If you are looking to purchase your first single family home, you may qualify for a grant from the federal government, or special financing from HUD (Department of Housing and Urban Development). In addition, many state and local governments have programs that allow you to apply for a grant for investing in real estate, and these may be used for buying your first home.
Another type of grant for investing in real estate is for those who prefer to invest in residential income property. This type of grant, which really isn’t a grant at all, supplements a portion of your tenant’s rent through a voucher system known as HUD’s “Section 8” program. Read more
Down Payment Grants
Often, the biggest problem first time home buyers have is coming up with the required down payment. Grant money for this purpose is available. Here are a few simple steps to start you on to getting your down payment funded:
- Determine approximately how much money you need. Your banker or mortgage broker can help you with this. Your real estate agent should be able to help you if you haven’t gone to the lender yet.
- Investigate local bank programs. Sometimes lenders will provide mortgage loans, particularly to first time home buyers, that require NO down payment. There are federally guaranteed loans that are often available through the VA or the USDA. These require no down payment – which is just as good as getting a grant, eh? Federal programs from the FHA insure loans so local lenders will make minimal-down payment mortgage loans.
- Look into HUD (Dept of Housing and Urban Development – a huge Cabinet agency, 2nd in size only to the Dept of Defense). This department has a very under-used, but super program that grants money for down payments. This program is called: ADDI, or American Dream Downpayment Initiative. A clickable link to it is on my website (that URL is below) or just search for HUD.
- Consider private “charitable” sources of downpayment money. Most of these essentially require the seller to fund your down payment. This is rarely a good idea. You have (hopefully) wrung enough other concessions out of the seller, like a very reduced price, that s/he will refuse to do this for you. But – no matter, you can almost certainly do this on your own.
Remember to be patient. Read more
Grant For Investing In Real Estate – A Smart Real Estate Investment Strategy
Government grants for real estate investing are a under utilized method for real estate investors to obtain funding for their ventures in real estate projects. Billions of dollars are distributed as grants to invest in real estate by governments at all levels, including state and federal.
Why is all this free money available for businesses and non-profits to put into real estate? Well, providing housing is a major function of the government and offering grants to invest in real estate is a way for them to outsource part of the job and spread the workload.
Which things can be funded through grants exactly, and can you obtain a grant for investing in real estate? There are certain programs to acquire properties, buy land, build houses, refurbishing and converting properties to dwellings, among all.
On top of the grants to invest in real estate there are also low-cost and forgivable loans available. A forgivable loan is a loan that essentially converts into a grant and need not be paid back. Many of these real estate grants and loans can be accessed for investing as long as they meet the requirements that the government sets down.
Some grants to invest in real estate are available to for-profit investors also but some are available only for non-profit organizations. But there are some ways for the smart investor to get into these offers of government grants and loans. Read more
How To Overcome Business Loan And Commercial Real Estate Loan Problems
One of the most difficult business loan scenarios occurs when a commercial borrower is rejected for either a commercial mortgage or commercial loan. There are five specific reasons that account for a healthy majority of business finance rejections. These common business financing application problems are particularly applicable to commercial real estate investment property financing.
Commercial borrowers are likely to be confused when their commercial loan application is turned down and will probably be unsure as to why it happened and what to do next. For each of the five major reasons that a bank might decline a commercial mortgage, a practical strategy is provided for converting the declined commercial real estate loan into an approved business loan.
Two reasons (tax returns and business plan requirements) could impact virtually all businesses. Many business loan officers will begin their business loan and commercial mortgage review process by stating “We will need to see at least three years of tax returns” and “Can you show me your business plan?” before proceeding.
Commercial projects are frequently too unique for traditional commercial banks. In these situations (even if a commercial borrower has favorable tax returns and an adequate business plan), it is not unusual for the business owner to be declined for a commercial mortgage loan by a traditional commercial lender.
The reasons described do not involve unusual issues. It is likely that two or more of the reasons will be applicable for many commercial loan situations.
Commercial Mortgage Rejections: (1) Special Purpose Commercial Real Estate -
Reason Number One for commercial mortgage rejections: The bank does not generally make business Read more
How Millionaires Make Money From Real Estate
Intelligent use of real estate can enable ordinary people to become millionaires in about 10 years or less.
A lot of statisticians say that on average across the board, property has doubled on average every 7 to 10 years in the last 146 years in Australia, this has happened in many other countries also. This statistic depends on location, quality of property and the price you pay for it of course.
How you can use property to create wealth
For instance, Bill and Mary are earning $50,000 a year and they want to replace their income. I am going to suggest that just by buying two investment properties, they could achieve this. Let us look at how they can buy two investment properties for them to retire. $50,000 a year is approximately $35,000 per year after tax. So would you be committed to buying 2 properties in the next decade if you could retire from them?
In year 1 of the plan, we are going to buy one property. The properties I tend to buy are often around $300,000, which we will use for this strategy. The second year we do not buy any property and the third year we buy our second property. In ten years time, these properties could be worth $600,000. That is 10 years after you buy them. (Always make your plans conservative as it could take 10 years or longer.) I generally buy properties in capital cities because these properties will continue to grow.
If the property doubles in 10 years, this is $300,000 in extra money we have made over 10 years per property, i.e., $300,000 each, now worth $600,000. You have earned $300,000 from capital growth. Bill and Mary need $35,000 a year net to replace their current incomes. They are probably thinking if they buy the property, they have to work harder. If they buy and sell to make a profit, they generally have to pay capital gains tax. In this strategy, we are going to buy a good property and keep it ideally forever. It is worth $600,000. They need $35,000 net cash to replace their income. Where can they get that from?
What about a line of credit?
A line of credit allows us to draw equity/cash out of property by setting up a bank account from which to draw this down. They can draw out $35,000 in the first year, then do the same in year two and three. Read more
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