Financing is the Most Important Aspect of Purchasing Investment Property in [Profile.market2]

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March 31, 2009, by Lee Ellis in Credit Information

The better your credit score is, the fewer obstacles you'll have to address when mortgage company staff in [Profile.market2] are reviewing your creditworthiness. They are generally referring to your FICO score when looking at your credit. This is a compilation of the three major credit bureaus and is the standard for determining credit worthiness in the industry.

An individual investor can aim for a FICO score above 710 because it allows individuals to obtain the best loans and have more bargaining leverage.

There are a wide variety of loan options available to the investor in [Profile.market2]. Some loans are geared toward homes which are energy-efficient. You can even find loans which will cover 100% or more of a purchase price. The Virginia Housing and Development Authority has a wide variety of loans, including some for full-value, and VHDA also teaches prospective homeowners about credit issues and repairing credit to buy a home.

There are still options available if your credit is not excellent. You may be able to negotiate the seller carrying a second mortgage on the property in [Profile.market2]. This is often called seller financing.

In one scenario, both you and the seller are both happy with the price negotiated. You get 80% through a bank or lender, and the owner agrees to finance the other 20% for you as a term of the contract.

You will find that the process of getting a loan is less complicated for eighty percent of the purchase price than full price. If you have negotiated a price below market value, this is especially true. Perhaps you agreed upon a final price of $100,000 while the real market value is actually $120,000.

With this example, the lender which supplies this loan only has $80,000 at risk on a $120,000 property. This is not as risky as lending 100% in an uncertain market.

Regardless of your choice in financing, you can always contact me about finding the right property in which to invest in the Alexandria, VA and Northern Virginia area. Feel free to contact me at 202-255-7790 and by e-mail at Lee@RealtyLee.com.