Ten Paths to Real Estate Financing

Ten Paths to Real Estate Financing

There are ten paths to real estate financing that open up your options. Many of us remember when getting a mortgage meant saving up to put down 20% on the home, and then the mortgage loan would cover the other 80%. This can still be done today, but people find that they have way more options than they had back then.
(1). The first option is a gifting program. There are places in this country where builders actually fund certain foundations that will give you a big portion of your down-payment. This allows for some lucky people to get into their home for as little as 3% down-payment. FHA is a good example of one of these funded foundations.

(2). No-doc loans are another option. These loans have either 'no' or 'low' documentation requirements. These are usually done through online banks. If you have bad credit and can put down from 20% to 30%, then you can obtain one of these even without a job.

(3). FHA loans. The FHA won't actually loan you the money, but they will guarantee it for your with the bank. This allows them to loan up to as much as 97% of the loan value depending on which FHA program you go through.

(4). VA loans are good options as well. All you need is to have a decent job, have prior service that falls within the guidelines, and a down-payment, and you can get one of these loans.

(5). Buy on Land Contract. Another term for this option is 'contract for sale'. This allows you, the buyer, to make your payments directly to the seller instead of to the bank. All your negotiations are done between you and the seller, as far as interest rate and down-payments, and the term of the loan.

(6). Seller-carried second mortgages. Sometimes a bank will let you put as little as 5% into the price of the home, but then they'll only loan you 80% of the purchase price. This is where the seller can take back a second mortgage for the difference, and you pay make the payments to the seller.

(7). State Housing Programs. Most any state has a form of house financing for low income buyers. They have many loan-guarantee programs available to assist you in you purchase.

(8). Family loans. Many shy away from making family loans. It just gets messy when family members encounter money hassles. But it's not that way with all families. And a family member who has money sitting in a bank drawing 2% interest, may like collecting 7% from you.

(9). Manufacturer loans. There are lots of manufactured home companies who are helping with financing their homes. They can offer 5% or less for a down payment on their homes.

(10). Credit Cards. This isn't for everyone, and can be risky, but your down payment can be put on a low interest credit card. This can be a good idea if you're expecting a nice tax return in the near future to pay it off with.

These ten paths to real estate financing are not the end of your options, but they give you an idea of what's available. You can do your own research and find there are many more ways of getting you the home you need.

Real Estate Financing Made Easy

Real Estate Financing Made Easy

by John Ashtonson

A real estate buyer typically borrows money from lending institutions that finance real estate investments to pay for the purchase. If the buyer chooses to pay in cash, he usually makes a down payment and mortgages to secure the remainder of the funds. It is obvious that the smaller the down payment, the greater the interest payment over the mortgage. The thing with real estate investments is that you will need a sum of money for the purchases that is very big for you to invest by yourself. This means that you will have to look for financing services to provide you with funds.
If you have made a modest down payment and have a good credit, you can ask banks to fund you after showing them your business plans. Banks will be glad to finance a part of the property costs; however, a bad credit, a poor business plan and not enough personal funds for the investment will put you at a low chance of acquiring funds from a bank. With a good credit, you can get low interest rates. A residential mortgage automatically has interest rates lower than other types of loans. Most banks will not loan out more money than the house's value, so you can talk to them for an additional loan if the property you are purchasing requires repairs. The best way to go about securing finances from banks is to do it through a mortgage broker. This ensures that you get the best rate of interest for your loan.

Getting finances from private investors is another good option if you are purchasing for profits. These private investors have a lot of liquid money. They will give you the funds for investing in the property or even do all the financing themselves. You should make sure you have a well prepared expense worksheet to show to the investors stating where money will be spent and the profits that you expect from the deal. Needless to say, the better the profits, the more likely it is that you will find a private investor who is interested.

You can also think about hard money lenders who specialize in real estate investments for financing your deal. The catch is that the interest rates are as high as 14%. The advantage is that you get your finances very quickly. Hard money lenders often lend up to 70% of the cost of the property after repairs. If you are looking for short term financing, this is your savior. Lenders often fund you in installments, and are a boon if you need a lot of cash, quick.

The seller can also finance you if he or she is not in need of cash immediately. This is done by making a mortgage contract that makes you pay the seller monthly payment in addition to a percentage rate. You can pay off the mortgage whenever you sell the property yourself.

You just need good cash flow numbers, and financing will be very easy to secure subsequently.