Monthly Archives: April 2015

How to Get a Mortgage for an Investment Property

Understanding how to get a mortgage for an investment property is an essential step of becoming a successful real estate investor. Especially in the greater Las Vegas area, there are numerous opportunities to make investments in property that is likely to appreciate in value while providing a good ROI through rental income. But getting financing on an investment property is often more difficult than obtaining a mortgage on your primary home. Here are some steps that can help you get the leverage financing necessary to purchase a rental property.

Real Estate InvestorHave a substantial down payment

Having a substantial down payment not only signals that you’re serious and well-prepared for the venture of owning a rental property, but it increases the chances you’ll be approved for a loan. Mortgage insurance doesn’t cover investment properties, so typically buyers are required to have 20%. A down payment of 25% to 30% may result in a lower interest rate. One of lenders’ biggest fears is that it’s easier to walk away from a rental property than from your own home. The more you’ve invested into a property, the more you’re perceived as being committed.

Know your credit score

While the bank will take a closer look at your down payment and the property’s value to loan ratio, the most important factor in getting an approval is your own credit score. Do you have a high credit rating? If not or if you’re unsure, take the time to examine your credit report. Free copies of your report can be obtained online. Addressing problems such as accounts in collections, late payments, and inaccurate information can drive up your score. A higher score not only increases your chances of approval, but it reduces the interest rate you’ll have to pay.

Consider alternate funders

Large national banks have stringent guidelines with respect to investment property loans. But an experienced lender can connect you with alternate funders that may be more willing to work with you. For example, a neighborhood bank may have more flexibility with respect to your down payment and a private lender may be willing to take a risk on a lower credit score for a higher interest rate. Talk with an experienced lender about your unique situation and goals to explore what solution may be right for you.

Are you thinking about purchasing an investment property in Las Vegas? Contact Sydnee Johnson today to arrange for a personalized consultation to discuss your options for mortgages.

What Is A Jumbo Loan?

At first glance, the term “jumbo loan” can be intimidating. However, in reality it simply refers to loans above a certain monetary limit. If you’re thinking of buying a larger home than the one or you’re opting for a high-end property, you might want to consider opting for a jumbo loan to help you get there. Basically, a Jumbo loan is any mortgage which is above the maximum loan limit set by Freddie Mac and Fannie Mae, the two biggest government-sponsored mortgage buyers. Here’s a closer look at what buyers need to know about jumbo loans.

Jumbo LoanWhat is a Jumbo Loan?

The limits on jumbo loans are set based on the median income guidelines for specific areas. The limit is $417,000 in 3,108 counties in the United States, whereas it is approximately $625,500 in 100 counties with higher incomes and costs of living. There are 92 counties in the United States where a jumbo loan limit falls between $417,000 and $625,500. In Nevada, the limit is $417,000, with Nevada Super Jumbo loans beginning at one million dollars.

How Can You Qualify for a Jumbo Loan?

Since jumbo loans are typically larger than the average mortgage, credit scores are incredibly important. Some experts suggest that credit scores for a jumbo loan are a minimum of 700; higher is even better. Income levels and low debt-to-income ratios are also critical. The maximum debt-to-income ratio for a jumbo loan is 45%.

Individuals who are looking into obtaining a jumbo loan have to show that they can make bigger payments every month and prove that they have the resources (and ongoing stability) to manage those payments. Since PMI doesn’t exist for loans this large, buyers must be able to put down an appropriately large down payment. One additional factor to note is that banks often have requirements for financial reserves set aside for the mortgage, to keep available to the buyers after the closing. On a conventional mortgage, it may be only one or two months’ worth of cash. For jumbo loans, reserves often need to be equivalent to 20% or up to six months of payments, depending on the lender.

For buyers with great credit, healthy incomes, and a strong overall financial picture, a jumbo loan can be the right choice to help you reach your real estate goals. Interest rates are currently excellent, and interest on loans up to $1 million may be tax deductible.

Are you a Las Vegas resident interested in getting a jumbo loan or mortgage on a higher ticket property? Contact Sydnee Johnson today to arrange for a consultation to discuss your options.

Can I Get a Mortgage After Bankruptcy?

“Can I get a mortgage after bankruptcy?” is one of the most common questions that consumers with a less than perfect credit history ask. As a lender, it’s important to help consumers understand both sides of that process. Yes, it’s absolutely possible to obtain a loan after a bankruptcy. At the same time, a bankruptcy – especially a recent one – will call into question your ability to pay back the loan and increase lender scrutiny of your application. There are a number of elements that lenders consider and steps that consumers can take to help get approved for financing to buy a home after they’ve filed.

BankruptcyTake time to rebuild

How much time has passed since you filed for bankruptcy? If you’ve recently filed for bankruptcy, then there is a high probability that you’ll be advised to wait some time before reapplying. The more time that has elapsed since your bankruptcy, the more time you’ve had to repair your credit and establish different habits for lenders to consider. For example, rent an apartment or condo and pay your month on time and in full each month to get a landlord reference you can use. Use the time after your financial crisis to focus to building a good payment history, a track records of savings, and to address any debts that may not have been erased in your bankruptcy.

Show financial institutions stability

One of the major factors that loaning institutions take into account when processing a loan is the current level of financial stability of your family. Even if you have a bankruptcy in your background, as long as you’re showing signs of commitment with a steady job and a secure monthly income, you may be approved for a mortgage loan. However, it’s important to ensure that you’re keeping up with your payments under your reorganization plan, if applicable, after you filed for Chapter 7 or Chapter 12 bankruptcy. Not only will your performance under any reorganization plan be scrutinized, but your employment situation, income level, and overall financial behavior since filing will be closely considered.

Establish creditworthiness

How can you effectively prove that you’re creditworthy enough to get a mortgage? Usually, people who’ve gone bankrupt have a credit rating which tends to be in the lower five hundreds. A higher score increases your chances of approval while minimizing your interest rate. Even with a score in the low six hundreds, your mortgage interest rates may be higher than the average. To increase your chances of getting a loan, first focus on raising your credit score. Obtaining lines of credit, using them responsibly, and building an on-time payment history – while keeping your overall balances low – is one of the best things you can do each month.

Are you a Las Vegas resident who has filed for bankruptcy that’s thinking about purchasing a home? Contact Sydnee Johnson today to arrange for a personalized consultation and to discuss a range of financing options that may be right for your situation.

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