Real Estate Financing – Helping Turn Dreams into Reality
Every individual has a couple of dreams. While it is a tad easier to achieve some of them, others come with a staggering sticker price which turns them into a distant dream; purchasing an own house or office is one of them. The real estate market crash is now recent history with property prices looking healthy again. This makes it the right time to purchase your preferred property as the earlier you cash in, the greater will be its appreciation. This is where Real Estate Financing steps into the picture.
Despite being in the recovery period, the prices for most estates are still on the steeper side. This means that you are going to need a little help from lenders to buy a new humble abode for your family or an office space to begin the operations of your business.
However, the days of quick and easily available finance are long gone. Now, the eligibility criteria are very thorough, which makes securing a loan a bit difficult. On top of it, many people do not know the first thing about loans and how they work.
So, whenever they hear about a slight drop in interest rates, they go for it. Little do they realize that the lenders factor in a lot of parameters before giving the final nod to their loan request. Often, the borrowers do not qualify for the loans, because of which their application is turned down.
If you do not want your loan application to meet a similar fate, then you need to know a bit about loans. There are many ways you can avoid this heartache and give wings to your dreams. Let’s take a look at some of them which will multiply your success rate:• Make a sizable down payment
If you are thinking about opting for Real Estate Financing in the not-so-distant future, then you should be ready to cough up some $$$s. Every lender has a unique criteria but you can expect figures ranging from 3.5% to 20% as the minimum requirement of securing a real estate loan.
Here is a smart tactic which you can employ to give yourself the edge; most people only fulfill the minimum criteria. They fail to realize that anything above the minimum requirement will be a welcome move by the lender which will empower them to negotiate better loan terms.
For example, if you can put down 25% instead of the standard 20%, not only you will qualify for better interest rate but your mortgages will also be a lot more affordable.• Be a ‘strong borrower’
Another way to ensure that your loan sees the light of day is by being a strong borrower. This can be assured by keeping a clean track record which can be done by making timely payments and avoiding defaults. If you have recently been through bankruptcy, then you should wait for a while and get your finances back in shape before you apply for a loan.
One of the biggest factors that affect Real Estate Financing is your FICO Credit Score. It represents your credit worthiness, which means the likelihood of you paying back what you owe. It ranges from 300 to 850 with most financiers looking for a minimum score of 680.
Again, a higher score would mean more favorable loan terms. So, reduce your debt and regularly pay your bills to stay on top of your credit report.• Shy away from big banks
If you cannot put together the necessary down payment due to any reason, consider going to your neighborhood mortgagee instead of a national financial institution. The reason being that local lenders offer a little more flexibility to their clients.
They know the market very well and are interested in investing locally. However, you should do your homework about your potential lender. You need to check their background and ask for references. Only proceed when you are absolutely certain of their services.• Know what you can afford
Lenders often pre-approve applicants for more than they can actually afford. Once you receive your pre-approval, take it with a grain of salt; crunch the numbers and find out if you can actually live with the mortgages that follow?
Your lender may have been generous with the amount, but you will be better off with a loan that fits your budget comfortably than a big house which drills a hole in your pocket. Lenders zero-in on an amount on the basis of your income and credit report. They are unaware of your lifestyle and day-to-day expenses such as day care, fuel, groceries, insurance, etc. Remember, no one is a better judge of your actual expenses than yourself.
These were some tips that can help you get a step closer to your dream property. Even if you are unable to qualify, do not get disheartened. Make a realistic plan to get your finances in shape and try again. After all, what fun would dreams be if you do not chase them?
If you are on the lookout for a residential or commercial property, then reach out to us! Our team consists of many real estate veterans who understand your needs and leverage their knowledge to direct you towards the best solution. We are also the go-to agency for Real Estate Financing in Rancho Cucamonga, CA.