The first option you might consider if you want to invest in real-estate is a conventional investment mortgage. An investment mortgage, is the same thing as a regular mortgage expect that it is used to purchase investment properties.
While an investment mortgage offers the lowest rates, the underwriting process takes a long time. In the worst case scenario, the sale of the property you were considering might go through, as you wait on your conventional lender to review reams of financial documents. So, if a conventional investment mortgage is the only financing option you consider, you could miss out on the best deals.
While conventional financing offers the lowest interest rates, these lenders have exceptionally high standards which many new investors may not be able to meet. The main issue comes down to credit, to get the best conventional investment mortgage possible your credit score should be over 700, the minimum is 620. So if your credit score is lower than 620, there is little to no chance you can qualify for an Arizona investment mortgage.
Some investors draw equity from their primary residence to finance the purchase of their first Arizona Investment Property, while others secure loans from crowdfunding websites. Some investors may have friends or family members with deep pockets, who are willing to help and who can finance their first purchase.
Home equity lines of credit, crowdfunding, and personal loans are all options you could consider if you can’t qualify for a conventional investment mortgage. However, of course there are drawbacks to consider.
With home equity loans, you put your primary residence at risk if you default. With crowdfunding there are not guarantees your loan will ever be fully funded and borrowing from close friends and family can put a severe strain on your relationships if you run into financial difficulties.
This type of lender uses the value of the property you aim to purchase as a means to secure the loan. For this reason, hard money providers can look past your financial situation and your personal credit score, making hard money an option if you can’t qualify for a conventional investment mortgage.
Unlike home equity loans, with hard money, there is often no need to pledge your primary residence as collateral. Most hard money providers have the funds on hand to fully finance your loan. So with hard money, unlike crowdfunding, there is no need to wait around for your loan to be fully financed. Unlike personal loans, you don’t risk your relationships with hard money.
While hard money is more expensive than other types of financing, it gives you options.
After you purchase your Arizona Investment Property, you can always refinance to a less expensive conventional loan after your financial situation improves.
So if your just getting started in real-estate investment and you can’t qualify elsewhere consider hard money as a potential financing option.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.