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Beginners Real Estate Investing Guide
Real Estate Investing - Ask
Questions Before Making an Investment
First Time Real Estate
Investor
Real Estate Investing - Planning
Your Investment Strategy
How to Find Real Estate
Investment Properties
Getting a Professional Home
Inspection
Large Profits From Inexpensive
Real Estate Repairs
Real Estate Investing - Costs
and Fees
Real Estate Insurance
and Risk Management
Real Estate Investment Risk
Part 1
Real Estate Investment Risk
Part 2
Getting The Best Return For
Your Investment
Creative Financing
For Real Estate Investors
Real Estate Investment Tax
Considerations
Real Estate Rental Properties
- Great Investment or Nightmare
Real Estate Foreclosures - Great
Deal or Headache
Flipping Real Estate for Profits
Slow Return On Real Estate
Investments
Negotiating for the Best Possible Real Estate
Deals
Real Estate - A Time to Buy and a Time
to Sell
Creating Your Real Estate
Investment Strategy
Investing and Growing
Your Real Estate Portfolio
Commercial Real Estate
Investing
Real Estate Marketing
Understanding Real Estate Law
Do You Need An Real Estate Agent?
What The Real Estate Mortgage
Lender Sees
Do You Have A Career In Real
Estate?
Rural or Urban Real Estate
Investments?
Real Estate Investing on the
Internet
Real Estate Investing
- Property or Paper? |
Real Estate Investing - Introduction
Real Estate Investing - What The Real Estate Mortgage Lender Sees
When you think in terms of real estate, you will often only see a property
from your own point of view. But in order to become a more successful real
estate investor, you need to learn how to look at a property and a real estate
transaction from a mortgage lenders point of view as well.
The first thing to realize is that mortgage lenders are not your personal
friends - in most cases. They are nice and friendly, but your best interests
are not what they are going to look after. It is their best interest that
they will always look after! To them, the real estate transaction is all
business, and there isn't anything personal about it. When they look at a
potential loan and approve it, they only approve it because they see the
potential for profit for them - not because they like you.
Mortgage lenders are very simple. They want to know that the loan is going
to be repaid, and how you are going to get the money to repay it. They want
you to assure them that you can do it, without question, and without problems.
You can tell them that you are a good risk, until you are blue in the face,
but that isn't what they want. They want documentation, in the form of your
past history and your current situation.
When looking at your past history, they will look at your past credit history.
They will look at the loans you have been granted, the size of those loans,
and how those loans were paid back. They will look at your FICO score as
well, and may also look at your employment history and the number of places
that you have lived.
If you have made other investments, they will want to see your income history
from those investments, and how long a period of time that income was made.
They usually want to see profit and loss statements, and tax returns for
the previous three years, at the very least. They want to know about your
outstanding debt, repossessions, legal judgements, and anything else that
they can get their hands on.
They want to see that you have experience in loans, that you get your loans
paid back on time, and that you have a good character and a good business
sense. Once they have looked at all of this, they move on to your current
situation. In many cases, if your past doesn't look good, they won't bother
looking at your current situation - it won't matter to them.
The mortgage lender wants to see the property appraisal. Even though the
property will be used as collateral on the loan, this really doesn't matter
to them. They don't want the property. They want their money back in the
form of the loan payments that you are going to make. Typically, a mortgage
lender will not finance more than 75 - 80% of the appraised value of a
property.
If the property is not developed, the mortgage lender may have a limit of
50% loan to value (LTV). In other words, they want to know what income will
be derived from the property, such as rents, and that amount must equal at
least 50% of the loan. They also want to know how much money is going to
be required to maintain the property, including repairs, taxes, insurance,
and other related costs. They want to insure that you can pay those expenses,
as well as the loan payments and interest charges.
Mortgage lenders want their money back, plus interest, in the shortest period
of time for investment loans. Where you may be able to obtain a 30 year mortgage
for a residence that you will live in, you can probably only get a 20 year
fixed rate loan - at the most - for investment property, and there will usually
be a balloon payment after a certain number of years as well. While the mortage
lender wants a shorter loan period, you of course benefit more from a longer
loan period.
Think of your mortgage lender as neither friend or enemy, but as a business
partner instead. Also remember that like any other sensible business person,
your mortgage lender is open to negotiations, in most cases.
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Beginners Real Estate Investing Articles
How to Advertise a Rental
Property
How to Build Equity
in any Real Estate Market
How to Find Motivated
Sellers
Developing a Profitable Real
Estate Investing Strategy
Bird Dogging: Getting Started in
Real Estate Investing
Buying Your First Home
Using Lease Options to Purchase Real
Estate
Real Estate Foreclosures
Increase Your Net Worth Through
Real Estate Investing
Interest Only Mortgages
Real Estate Investing
No Money Down Real Estate
Investing
The Power of the Lease Option
Real Estate Investing Tips
Real Estate Investments
Refinancing Your Mortgage
Loan
Paying Your Mortgage
Selling Your House without a
Realtor
"Subject To" Real Estate
Financing
Using Trusts as a Real Estate
Alternative
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