Thursday, April 21, 2011

The longer the house stays on the market, the longer the borrower will have to pay the mortgage on the loan.

California Wholesale Real Estate – Pinnacle Property Solutions: There is a trend toward a tightening of the financial resources out there for today’s investors. If you are just getting started, or wish to begin real estate investment, you will have a more difficult time than those who began a decade ago. Money flowed easily when the market was hot, as the lenders could give no money down loans and the houses would be bought, fixed up, and resold in a matter of months. Then they would be repaid.
The market is so flat these days, however, that it’s more difficult to predict whether or not you will be able to sell a house you have bought and fixed up. The house could sit empty for quite some time. This has made the lenders more hesitant to pass out money for investments. They now require quite a bit of down payment and you’ll need decent credit.
The size of your down payment will also be important in determining the interest rate you’ll pay for the loan. With the repayment of the loan when you sell the investment property, you’ll determine the final profit on your investment. That’s why the interest rate is important and you should work on getting the best rate possible. If that means waiting a bit longer to enter the real estate investment market so you have more of a down payment, it will be worthwhile waiting for.
Another factor that makes the lenders more hesitant is that properties are staying on the market for an extended period of time, chipping away at the investor’s profit margin. The longer the house stays on the market, the longer the borrower will have to pay the mortgage on the loan. Unless there is a renter in the property to help you pay the loan, it will become increasingly difficult for you to pay the monthly required payment.
Financing for Investment is Tight in Today’s MarketIf you are new to the real estate investment business, be very cautious about entering a deal with not much in the way of cash reserves. Check on your ability to obtain a loan before you make an offer on a house.Find out what you will be able to afford easily and what kind of down payment you’ll be looking at. This is good information to know before you even start looking for bargains. Avoid getting yourself into a situation where you have a mortgage to pay and can’t unload the house. You’ll be paying taxes, insurance, and more for as long as the house remains on the market.

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