Wednesday, February 25, 2009

Credit Scores

1. Credit scores below the ‘excellent’ (at least 720) range will likely result in higher interest rates, more discount points at closing or potentially, denial of the application.
2. Down payment requirements are at a minimum of 25 percent on just about everything, even duplexes. (If you know of a legitimate source for 10 percent down, let us know.)
3. Investment property rates have dropped a little since November and are now in the range of 6.75 - 7.25 percent without adjusting for credit scores and other ‘risk factors’ as determined by the lender.
4. Lenders are also beginning to require points to be paid on some loans rather than offering it as an option to buy down the rate. This is likely an effort to reduce speculative short term strategies.
5. If you have four (4) or more residential mortgages, you cannot get another residential loan (and yes, your primary residence counts). You will have to seek alternative sources of financing such as commercial loan products, seller financing, or private equity.

Commercial Loans

1. Rates seem to be hovering in the 6.25 - 6.5 percent range for your typical loan, amortized over 15 to 20 years with a 5- to 7-year call.
2. Down payment requirements are typically 20.
2. There are no limits on the number of commercial loans a bank can give you. Any limit they impose would generally be at the discretion of the bank.
3. Commercial banks, especially local, privately owned institutions value relationships and continue to show a willingness to be ‘flexible’ relative to residential mortgage lenders. These banks are not boxed in by third-party regulations and can still make loans if the borrower is strong and they value the relationship with the client.

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