If you are a real estate investor, you probably know that good rental property loans can be difficult to obtain.
Banks and other lenders typically see these as riskier loans so they create tighter guidelines to minimize their risk.
If you look at historical loan default and foreclosure data, it suggests that rental property loans are more likely to become delinquent when times are tough than are owner occupied property loans.
New Less Restrictive Guidelines
Even though the large banks are still very cautious to make rental property loans, there are now several large national mortgage banks with new, more flexible guidelines in the following three areas:
Higher Loan-To-Values – smaller down payments and less equity required
Until recently, to get a decent loan when purchasing a rental property, you would be required to put 25-30% down or have that amount of equity when refinancing.
New programs allow 10% down, and in some cases, less when refinancing.
Cash Out – less restrictions on LTV, amounts and use
For investors looking to take cash out of an existing rental property, now is the time. The amounts allowed and terms available are much better than in recent years.
Getting more of your equity out and a larger amount of cash is now possible.
Lower Credit Scores – required score lowered by 100 points, or more.
Just recently, new programs have been released allowing credit scores as low as 620 on rental property loans (even lower in some cases). The old credit score minimum was 720 for “prime” market loans.
Other Improvements
These new rental property loan programs also offer:
- Larger Loan Amounts – jumbo loan amounts
- Fixed Rate Options – low cost fixed rate options
- No Pre-Payment Penalties – no penalties for early pay off
If you are looking to purchase an investment property or lower your payments to improve cash flow on an existing property, consider using these new programs.
With rents on the rise, and very low interest rates, isn’t it time to maximize your returns?
We work directly with the large national wholesale banks that are offering these programs.
Are you ready to see what these new rental property loans can do for you?
Brian Bush
Office: 310-817-6410 x220 | Direct: 310-601-1997