FINANCING YOUR REAL ESTATE PURCHASE

Today, I want to write about the issue of financing your real estate purchases. Whether you are looking for real estate for your own residence or as an investor, many people often see money as a big barrier keeping them from buying a property. While real estate is more affordable today that it was 5 to 7 years ago during the real estate boom, the down side is that real estate loans are more difficult to get when many lenders were doing no document, interest only home loans. I have listed below a few things to consider in purchasing real estate today:

CREDIT SCORE- If you are purchasing real estate and are looking to finance the purchase, a lender is going to want to be sure you can repay the loan. There are a number of things that assist private and public lenders making that assessment. First, they need to see that you have income to pay back a loan from a job, investments, or retirement. Secondly, lenders are going to look at your credit score through agencies such as Trans Union or Experian. The credit score gives the lender an idea on how you have done in making payments on credit purchases in the past. If your credit is not good, it is important that you begin now to improve your credit. While there are some companies that say that can easily repair your credit for a fee, I am skeptical of those claims. The best things you can do to repair your credit is to pay down your credit cards, pay your debts on time, and check your credit report to be sure it is accurate.

USDA AND FHA LOAN PROGRAMS- A few years ago, there many loans that you could get with no money down. You will have a hard time finding such a program today. One program that is available with no money down for qualified parties is the USDA loan program. This program is not available on all properties but only those in rural areas. If you want to know if a property is eligble for the program, go to the USDA rural development loan program web site and type in the address for the property to see if it is eligible. FHA also has some programs with a down payment for 3 percent. Like the USDA programs, you and the property must qualify.

HUD PROGRAMS- HUD of the U.S.A. also has some good programs for eligible parties. In certain areas, there is housing available for teachers, fire fighters, police officers, etc. at a significant savings. Check out the HUD web site for more information.

SELLER/OWNER FINANCING- There are some homeowners that are willing to sell a home with seller or owner financing. Some sellers will even require a low downpayment or no downpayment. You can find some of these on websites such as Craiglist. If you are working with a realtor, get the realtor to search for properties with owner financing. One form of seller financing is a lease with an option to purchase. In this scenario, the homeowner gives the renter/buyer the chance to buy the property for a certain period of time while they lease the property. Some sellers will give credit the renter/buyers with a portion of the monthly lease toward the purchase. If you are currently renting or leasing a property, check with your landlord to see if this is a possibility. The worse they can say is “No”.

There are many other possibilities and ideas to consider. These are only a few. Talk to a real estate professional, a seasoned real estate investor, or a seasoned mortgage professional for other ideas. Good luck.- Randy Wall, Lora Lee Properties