Financing rental property.
I am a 33-year-old female seeking to increase my wealth through real estate investing. I have great credit but little money to put down. I do not want to take money out of my current home. I read an article where a person received 100% financing for an investment property through a first-time investor program. Where can I find these types of programs or loans?
--L. Smalls Via the Internet
Obtaining 100% financing for investment properties is not easy, because lenders see such loans as risky. In fact, since it is considered a commercial purchase, many lenders insist on 20% to 30% down and significant cash reserves for investment property loans. And the credit score requirements are generally higher as well--680 and above. Each lender has different criteria for investment property loans.
You can obtain 100% financing for a one- to four- unit rental property from most lenders but not as a straight investment property. You would qualify under conventional owner-occupied provisions, whereby you agree to live in the building for a set period of time in exchange for a more favorable loan agreement. In some cases, you'll receive an 80/20 loan, which requires a first and second mortgage loan as a way of avoiding the cost of private mortgage insurance (The first loan covers 80% of the total amount financed and the second mortgage the other 20%).
--Matthew S. Scott
Mail your money management questions to Ask B.E., BLACK ENTERPRISE 130 Fifth Ave., New York, NY 10011 or send an e-mail to firstname.lastname@example.org.
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|Title Annotation:||MONEY MATTERS|
|Author:||Scott, Matthew S.|
|Article Type:||Brief article|
|Date:||Jul 1, 2006|
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