Financing real estate investments can be tricky. There are several types of lenders that make loans on investment properties, and the requirements to finance an investment property can be significantly different than they are for a primary home. Having said that, there are a ton of real estate investment lending options out there, and it isn’t terribly difficult to find a loan for your next real estate investment.
Below are a few suggestions that can help you make sure that the process goes smoothly, and that you’re financing your investment property with the best possible terms you can get.
Work On Your Credit Score
Whether you’re applying for conventional real estate investment lending for your investment property or for a commercial asset-based loan, you can be sure that your credit score will come into play. Lenders generally check your FICO credit score from all three major credit bureaus and use your middle score to determine your eligibility, your down payment requirement, and your interest rate.
A FICO® Score of 740 or higher will generally qualify you for a lender’s best terms, so working on your credit score can be an extremely smart move.
Get Your Income And Employment Documentation In Order
There are asset-based lenders who don’t care about your personal income or employment history when you apply for an investment property loan, and they can be great options. However, conventional lenders generally offer better terms than asset-based lenders, and they will certainly consider your income and employment situation when making loan decisions.
So, before you begin shopping for real estate investment lending options, it’s a good idea to gather all of your income documentation. This includes your last couple of tax returns, W-2s and/or 1099s, and a few recent pay stubs won’t hurt. It’s also worth having a contact number for someone (like your employer’s HR department) who can verify how long you’ve been at your job.
Pay Down Some Other Debts
Even though asset-based lenders won’t consider your personal debts in the way conventional lenders will, debt reduction can boost your qualifications for any type of real estate investment lending option. Debt reduction can raise your credit score, which, as mentioned above, will help your chances of approval and improve your loan terms with any type of lender.
These are just a few suggestions for you to consider before looking for real estate investment lending. We here at Real Estate Funding Solutions are always here to help and can’t wait to guide you through your real estate investing journey. Send us an email at info@realestatefundingsolutions.com today to let us help you get started!