Purchasing or Refinancing an Investment Property is something that must be done with someone who has the knowledge and experience to help investors ensure that they are protecting exactly what this home will be, an investment property. Whether you are a seasoned investor who owns 5-10 Investment properties or a first time investor who sees the benefit of having real estate as a part of their investment portfolio, we can help you get a great investment property loan.
Owning, managing, repairing, improving and overseeing even one investment property can be a big responsibility, as many of you who are reading this already know. There are many of considerations to take into account before purchasing and there are different considerations that lenders take into account when qualifying you for the financing of your 1st to 10th financed home.
The Conventional (Fannie Mae and Freddie Mac) loans are the most popular programs used in purchasing and refinancing investment properties due to the low rates offered. Typically a 20% down payment (based on the acquisition cost, not actual appraised value) is required, although we have access to a 15% down conventional product as well. The entire down payment must be your own money. You must also full income qualify, which means that you must prove your income is sufficient to cover the monthly payment of your existing monthly liabilities in addition to the new mortgage payment for the additional new property being purchased. With the conventional loan type, you also need to have assets remaining in your accounts equal to 6 months of monthly payments for each property owned (to include principle, interest, taxes, insurance and association dues.)
The Conventional loans mentioned above are not used to flip houses. We have a separate lender that will allow you the ability to fix and flip a home; although, buy and hold investors are who we most often work with. New programs being released have given us the ability to now do fix and flip, and other unique guidelines now allow us to help more investors.
We offer some of the more popular Conventional investor programs but now offer specific variations to the more stringent guidelines. Some of these alternative options include:
- Fannie Mae Delayed Financing Program: This program is designed for those investors who have purchased a home in full with no mortgage on the property. Within 6 months of purchasing the home you are able to refinance this property up to a loan amount equal to the amount that was originally paid for the home. However you are able to use the full appraised value of the home to establish the loan to value. So for instance if you paid $150,000 for a home that will appraise for $200,000 then you can obtain a 75% loan with NO PMI, which will reimburse you for the entire investment of the home, essentially allowing you to have a 100% effective loan. This is used by some investors who are able to acquire a home with equity that might not have an appraisal that would have been acceptable to the lender at time of purchase. This is for buy and hold investors.
- Freddie Mac allows up to 85% loan to value for Purchase loans (only 15% down). This loan requires mortgage insurance and is available to investors who are financing up to their 4th financed total number of properties. The interest rate is slightly higher and the mortgage insurance is more than typical mortgage insurance than that of a primary residence, but it allows you the opportunity to minimize down payment. This is also intend for the buy and hold investor.
- Fannie Mae’s HomeStyle Renovation loan is another investor loan option which offers an investor the opportunity to purchase a property and include some of the cost of the rehab of the property into the total investment property loan. There is still the down payment needed, but you would not need the total down payment plus rehab money to do the repairs to the home (this is also a buy and hold loan)
- Another investor offers a way of qualifying using only the rent amount of the new property being purchased. This is called the “Investor Cash Flow” loan. Your qualification is based on the cash flow of the property, your personal income is not used.
- The investor that offers the fix and flip loan base their loan on your experience level of fixing and flipping homes, on the as is value of the home and on what the after improved value of the house should be. This loan gives draws to help complete repairs to the home. The amount of down payment is based on your level of experience and the value of the home.
- Another investor offers options for self-employed investors who can use average deposits into the business bank accounts as verification of full income verification.
- Another investor offers loans for investors who wish to finance between 10-20 financed properties. This also comes at a low loan to value and higher than typical rates.
Raleigh Mortgage Group works with numerous banks, lenders and portfolio investors that offer these and other Investment Property Loans. If you are interested in being pre-qualified to purchase or refinance an Investment Property or any of the other loan type or program please contact us.
For more information please call Raleigh Mortgage Group today at 919-866-0212 to speak with an experienced and knowledgeable loan officer who can help you determine if this loan program is right for you.