Financing Investment Properties-Tips
With the economy no longer being in shambles, investors are once again ready to get their feet wet in residential real estate. There is however, one problem that still prevails, financing the investment. The credit market isn’t as easy to pick at as it was in previous years and thus, a bit of preparation needs to be done in order to be more attractive to lenders.
Strengthen your credit score
In order to be as appealing as possible and to have lenders say, ‘I want to give my money to that guy’, you’ve got to have some appeal. The way in which you do this is by having a strong credit score. Nothing shows that you’re trustworthy and reliable more than a high credit score. One that’s at or above the 740 bracket will allow for the securing of lower interest rates and more options in terms of lenders.
Money in the bank
The down payment you’re able to make plays a very important part in the interest rate you’re able to secure. In order to get the best interest rate possible, you want to be able to show the ability to make a down payment of 20-25 percent.
Big banks aren’t your best friend
This is one mistake that many first time investors make. They are of the impression that the bigger the bank, the higher the chance for them to secure a loan with a low interest rate. If your credit score isn’t up to scratch and mustering up the 25% down payment isn’t something you’re able to do, then turning to smaller banks will be the better option. These small local banks are typically more flexible and with their knowledge on the area, they are more aware of the state of the local market than bigger banks.