Recently I spoke with Adam Rubin, of Unity Mortgage Corporation. While Adam handles many of the typical owner occupant loans each year, he also originates loans for investors. Adam was kind enough to give me some background information that I thought might be of value to the newer members of GAREIA.
The format is basic question and answer, with some extra discussion thrown in.
Essentially, conforming loans have limitations on the total amount that can be borrowed, they require full documentation, and in most cases they are funded by large entities, such as Fannie Mae and Freddie Mac. These are the types of loans that require verification of income, good to very good credit scores, etc. When the general public goes out to buy a home, the chances are that they will be qualifying for a conforming loan.
Non-conforming loans do not have the loan amount restrictions imposed on government funded programs, may require less or no documentation, and they may be less strict about the credit score of the borrower. Private entities, such as large corporations or groups of investors usually fund these types of loans. These groups have more flexibility in their lending criteria, which means the investor may have an easier time qualifying. You can even get non-conforming loans right now that do not require you to provide any documentation of income, assets or a job.
If your credit score is very good, 680 or above, it is possible to get this type of loan for investor owned property. However the lender will usually require up to 20% down from the investor, so this type of program is best suited to those with some cash on hand.
Yes, if your credit is really strong, and you have other income.
Bankruptcies usually need to have been discharged for 2 years. If you have 10 to 20% to put down, you can usually get an investor loan through FHA or VA after the 2-year period.
If your credit is a bit better than that, say, a credit score around 580, you can get a VA loan with just 10% down. FHA and VA tend to be pretty good ways to go if you have had some credit problems in the past. Don’t forget that with VA loans, you will pay a 2.25% funding fee, which may be financed into the loan under some circumstances. Also it is worth noting that VA has properties for sale in their foreclosure listings that are sometimes designated as "investor special". This means that there is no down payment required, but these properties usually need a lot of repairs. The VA will not loan money for the property and fund the repairs too. You will have to have another source for repair money. If you are interested in this type of loan, have your realtor provide you with a list of VA foreclosures or, check out their web site!
Well you can, but the main drawbacks are that hard money loans are at much higher interest rates, while FHA and VA loans are going to be at or near market rates. Also, hard money lenders will usually want very short financing periods, typically 90 days. This is not practical if your plan is to buy and hold.
A 90% cash out refinance can be done with as little as 6 months "seasoning", meaning you have made payments on the original loan for at least 6 months. You may also prepay 6 months payments to accomplish this in less than 6 months.
This has been an incredible real estate market in Atlanta, in terms of the funds available for financing. At least for the next few months to a year, I don’t see any big changes. I think that investors in Atlanta will continue to enjoy an unprecedented availability of funding for real estate.