Financing Investment Properties
Financing Investment Properties – Good News For the Conventional …
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.
Author: Ania Tates
Ania Tates, Co-founder of Favored Enterprises, LLC Favored Enterprises, LLC offering real estate investing that works in YOUR favor.
We are a group of real estate investors who buy houses from people just like you. We are not Realtors or associated with any real estate agency. You’ll get a fair price for your property. You’ll sell in days for CASH or terms. There are no fees and no commissions since we are not Realtors. We are able to work with all types of mortgages. You will get a simple, no hassle closing with no cost to you.
Contact us now for your real estate needs! We buy, sell, and lease! (800)-410-2111 or visit us at http://www.sellhousefastmaryland.com.
Feel Free to follow us: http://twitter.com/fenterprises
Article Source: http://EzineArticles.com/?expert=Ania_Tates
Property Investment – Insider Secrets to Acquiring Bargains
Discovering great properties for real estate investment also entails the assistance of a property coach…
Investment Property Advice – How to Avoid Mistakes
Buying an investment property generally entails financing contracts. Making wrong choices in financing can limit how much property you can actually invest in…
Real Estate Blog – Financing Investment Property
If you work with investors and need a lender who has a ton of experience with investment property, including purchase rehab deals, look no further…
Mail this post
Filed under best place to invest money 
Leave a Comment
Pings on Financing Investment Properties