What are Real Estate Investment Loans

Posted on October 30, 2008
Filed Under real estate foreclosure investment |

When a loan is secured by real estate collateral, it is known as a real estate loan or more commonly a mortgage. Investors prize this form of real estate because it gives them an opportunity to bring in cash. Real estate investment loans dont just come from banks and loan agencies. They can also be found via mortgage bankers, pension funds, finance lenders, and insurance companies. Investors can even secure these loans via private individuals.

The different types of real estate investment loans serve different purposes. With a residential loan, the property is only used for commercial purposes. Stores, warehouses, and commercial businesses fall into this category. Residential loans, on the other hand, can only be used for residential real estate purposes. These can also include loans used for rental income. When an investor gets this type of loan, he or she usually receives a one-time lump sum payment from the lender. This sum is paid back in installments.

Since purchasing a residential property involves having a great deal of money, a person has to undergo a thorough screening process to be approved. Many factors contribute to the lenders decision. These include the borrowers income, their credit score, and their debt/income ratio. The interest rate on the loan depends on all of these factors.

Consisting of short term loans, long term loans, and interim loans, real estate investment loans come in many varieties. There are also other options like equity financing, construction debt, permanent debt, interim financing, structured financing, mezzanine financing, foreclosure investor money, residential repair funding, and hard money loans.

Investors with less than perfect credit should not lose hope. Loans such as bad credit real estate loans are specifically formulated for individuals with tainted credit reports. Although it is a higher risk to the lender, it allows individuals to obtain a mortgage from a company when more traditional companies might decline the loan.

Interest rates are often based on how long your repayment terms last. If you have a twenty year loan, the interest rate will be higher than a five year loan. Talking frankly and openly with a loan rep will help you understand all the intricacies of the process.

Depending on the investor, many people prefer options like buying shares in a Real Estate Investment Trust (REIT). These can be used as collateral to fund investment loans.

Comments

4 Responses to “What are Real Estate Investment Loans”

  1. ufdan25 on October 30th, 2008 10:18 am

    Where is the best place to go for a real estate investment loan in FL?
    I'm looking to buy a property and I don't have much to put down, what kind of finacial requit\rements do banks usually require to purchase investment properties?

  2. eGuy on October 30th, 2008 3:20 pm

    this here is a good place to start
    http://www.nohasslebargains.com/loan/financing.html
    Financing
    Financial Services
    References :

  3. jcorreahq on October 30th, 2008 3:22 pm

    I can help you out, I am a mortgage broker in FL and have access to over 100 lenders and work with all types of credit. I have several programs that fit your needs. Please feel free to contact me, Jcorreahq@yahoo.com I can look into your situation and get you a loan that meets your need and quickly. I look forward to hearing from you! ~Joseph
    References :

  4. too expensive! on October 30th, 2008 3:24 pm

    Good time to buy?

    In most area of the U.S., housing price stopped going up as inventory continues to build up. It is normal to see a correction as a boom that lasted for several years.

    If you are investing new money in to real estate, this may not be a good time as the potential return on investment is small compare to the high risk of lower home price.

    If you are doing a side way move, meaning you are selling one to buy another one, then it is acceptable.

    Nothing is absolute, but housing market is very likely undergoing a correction and this is only the beginning. Some say this would be a soft landing (0 to 10%). Some say a big crashing is coming (10 to 20%).

    http://money.cnn.com/2006/08/24/news/economy/newhomes/index.htm
    http://money.cnn.com/2006/08/23/news/economy/homesales/index.htm
    References :

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