Before you make up your mind to buy an investment property, you should clearly understand your lender’s loan terms. What if you are assuming a down payment of 20%, only to find later that the lender is asking for 30% down payment? Knowing your lender’s terms well in advance saves you from such unpleasant surprises. The best mortgage brokers in California, BGK Investments, can help you understand the technical jargon that lenders often use.
To clearly understand the terms of the expected loan and the lender’s criteria and guidelines will enable you to assess your potential investment clearly, make sure you talk to the best mortgage brokers in California, such as BGK Investments, before you start making offers on real estate.
Which loan products are available?
Lenders could provide one or more of these loans: conventional, Fannie Mae/Freddie Mac loans, FHA/HUD loans, bridge loans, and/or construction loans. The more options the best mortgage brokers in California can provide the better.
What are the basic terms for a typical loan?
Ask about the loan-to-value ratio that is going to be offered. Find out the expected rate of interest, term, and amortization. You also need to know whether the loan will be secured by collateral or your lender would ask for a personal guarantee.
What are the costs associated with the loan?
Understand the costs of third party reports, such as the appraisal, structural and environmental reports, and legal fees. There are often prepayment penalties if you decide to refinance or sell before the term of the loan. Go to the best mortgage brokers in California, BGK Investments, to get the best possible options.
Are there any net worth requirements?
Typically the lender will ask you to show liquidity of 10% of the loan and a net worth equal to the loan balance. There could be a reserve or minimum account balance pre-requisite. Some lenders may ask you to deposit a few months’ months of interest payments into an escrow account.
What are stable and distressed assets?
Generally assets, with less than 80% occupancy, may be considered distressed. The loan terms for both stable and distressed could be different. The best mortgage brokers in California, BGK Investments, specialize in mortgages for distressed assets.
How long does it take for the loan to reach you?
Normally loans take 45-60 days to close. Make sure you know the timeframe for this lender.
To understand how lenders treat each mortgage and work out the best possible solution for you, seek advice from the best mortgage brokers in California, BGK Investments.