I know your question was about private investors, but this is normally reflective of the qualification process of typical investors, But they are less strict.
Here are the most important factors when trying to qualify for a loan.
LTV, Loan to Value Ratio. Example: 90,000 Owed on a 100,000 Market Value House = 90%LTV.
The other 2 most important factors are=
Credit (620+ is considered Conforming, and is accepted by fannie mace & freddie mac's guidelines)
Debt to Income Ratio: 500 Income, 1,000 Debt = 50% DTI ( debt to income ).
Anything Over 50% DTI is dangerous, and typically will not be considered "conforming" which means you fall into a class of being Higher risk for the lender.
All of these factors come into play when being considered for a loan by any typical Bank, But there is Options ( Stated Income ): No Income Vefication, No Ratio, & more.
Each one of these factors will play huge role in any lenders choice to lend money or not.
In the case where your exceptionally strong in 1 area and slightly weak in others you may pass.
Note: If you have been late on a mortgage in the last 1 Year, you can not be approved for a "conforming loan".
Quote:no! I want to begin investing in real estateThank you for clarifying your goal. I thought it a little unusual that you would come to a real estate board looking for financing as a "First Time Inventor".
I am not a full time investor but I am a Mortgage Broker. I am just as interested in reading the answers to your post. However, I would say that to answer your question would require a little more background information such as:
Type of Investment (short/long/flip/etc...)
Amount of Loan
What are acceptable Terms
What type of seller (Motivated?)
Type of property
State you operate in
I'm am aware of many ways to obtain financing from non-traditional lenders. None of which offer low interest rates - which is ok if you intend to flip a property or hold for a short term. The first that come to mind are Sub-Prime Lenders (which are sometimes full on lending institutions so this is probably not what you are looking for), There are Hard-Money Lenders - Usually Private investors looking for high returns. You may be able to find a REI in your area that would be willing to provide capital for a cut in your transaction (a sizable cut, I'm sure!).
Or, try the seller himself. Many times the seller is highly motivated and would be willing to carry back a loan and give you title "Subject-To" existing financing. This means you get title and will pay the monthly note but the mortgage will remain in the sellers name until you find a buyer. This is how I bought my first investment property and it was a win-win situation for the two of us involved.
I hope this was helpful to you.
Lee
27th July, 2003
Lee, that is amazing your informantion have been very help. I'll like to tell you more about my situation, I'm login off in a few. I'll reply in the morning Okay!!
What did you invent? Do you own the patent?
If so, you may find an investor that will make a loan against the patent rights.
no! I want to begin investing in real estate
Hey, whatsup. Im a Mortgage Broker from New York-
I know your question was about private investors, but this is normally reflective of the qualification process of typical investors, But they are less strict.
Here are the most important factors when trying to qualify for a loan.
LTV, Loan to Value Ratio. Example: 90,000 Owed on a 100,000 Market Value House = 90%LTV.
The other 2 most important factors are=
Credit (620+ is considered Conforming, and is accepted by fannie mace & freddie mac's guidelines)
Debt to Income Ratio: 500 Income, 1,000 Debt = 50% DTI ( debt to income ).
Anything Over 50% DTI is dangerous, and typically will not be considered "conforming" which means you fall into a class of being Higher risk for the lender.
All of these factors come into play when being considered for a loan by any typical Bank, But there is Options ( Stated Income ): No Income Vefication, No Ratio, & more.
Each one of these factors will play huge role in any lenders choice to lend money or not.
In the case where your exceptionally strong in 1 area and slightly weak in others you may pass.
Note: If you have been late on a mortgage in the last 1 Year, you can not be approved for a "conforming loan".
Quote:no! I want to begin investing in real estateThank you for clarifying your goal. I thought it a little unusual that you would come to a real estate board looking for financing as a "First Time Inventor".
hi lavonda,
I am not a full time investor but I am a Mortgage Broker. I am just as interested in reading the answers to your post. However, I would say that to answer your question would require a little more background information such as:
Type of Investment (short/long/flip/etc...)
Amount of Loan
What are acceptable Terms
What type of seller (Motivated?)
Type of property
State you operate in
I'm am aware of many ways to obtain financing from non-traditional lenders. None of which offer low interest rates - which is ok if you intend to flip a property or hold for a short term. The first that come to mind are Sub-Prime Lenders (which are sometimes full on lending institutions so this is probably not what you are looking for), There are Hard-Money Lenders - Usually Private investors looking for high returns. You may be able to find a REI in your area that would be willing to provide capital for a cut in your transaction (a sizable cut, I'm sure!).
Or, try the seller himself. Many times the seller is highly motivated and would be willing to carry back a loan and give you title "Subject-To" existing financing. This means you get title and will pay the monthly note but the mortgage will remain in the sellers name until you find a buyer. This is how I bought my first investment property and it was a win-win situation for the two of us involved.
I hope this was helpful to you.
Lee
Lee, that is amazing your informantion have been very help. I'll like to tell you more about my situation, I'm login off in a few. I'll reply in the morning Okay!!
I would really like to talk more
AnthonyNewYork, thank you for the info