Investor Loans are also commonly referred to a non owner occupied mortgages. These loans generally have higher interest rates due to the fact that the loan is higher risk to the lender.
There are many 100% investor loan programs, down to a 620 score.. Or if you get creative, with seller held seconds down into the 500's...
Most lenders have limitations on how many properties they will finance for one investor and how many investment (NOO) properties can be owned by one investor. Please consult with your Broker, to match your specific needs, with the right lenders.
Many borrowers have trouble understanding why loans to investors are considered riskier than loans to occupant homeowners. The fact is that the default rate on small investor loans is significantly higher than that of their owner occupied counterparts.
The common scenario is that the investor is unable find a
tenant for the property. Without the tenant's income (rent) the investor is unable to make the mortgage payments. The investor is usually not as concerned about losing the property through foreclosure because it does not take away the "roof over his head".
When it comes to investors mortgages, most real estate investors prefer loans with the lowest monthly payments. Adjustable rate mortgages, interest only mortgages, and hybrid mortgages often have lower starting rates, and therefore lower monthly payments than their fixed rate
counterparts, at least for the first few years. Investors prefer mortgages with low monthly payments because a real estate investment is said to be a sound investment if it produces a monthly cash inflow.
Investor loans are my specialty. I have developed extensive knowledge of the underwriting requirements of these products. For experienced investors, there are depreciation and expense treatment methods which improve your ratios. For new investors, there are programs allowing investment in real estate with lower down payment requirements.
Its tough to get a high amount of financing on investor loans. The banks limit you on the financing you can get.
Investors often need creative financing. Loans for investors often need to be structured different from top to bottom, beginning with what lender gets used and ending with documentation type and how escrow gets dispersed.
Many investors will also borrow money from another property to put down or buy free and clear of any mortgage for a new investment property. An example of this would be taking out an equity line or refinancing your primary residence to get some cash out to use for the down payment or to completely pay off the investment property. This will allow you to obtain better interest rates on the money being financed and may allow for more financing options to help increase cash flow even more.
You may not have as many options on investor loans as you would with a convention loan on your primary residence. Along with a higher rate, you may encounter higher fees and closing costs.
Even though investor loans may carry higher interest rates than owner occupied loans, there are still programs that can allow investors to maximize cash flow.
One of the reasons that lenders consider investment mortgages to have higher risk is the fact that the borrower will not be forced to move if he/she defaults on the mortgage. Borrowers who's mortgage is associated with their primary residence are more likely to pay, since they don't want to be evicted due to default.
If you have any questions regarding our products, you can contact us by calling or e-mailing us and we'll get back to you as soon as possible. Thanks!
Information listed above is to be used for educational purposes only and is not guaranteed