In Monroe County there’s no better time than now to be looking for great real estate deals! Assuming that you have a positive credit rating and feel financially secure, you shouldn’t have any issues securing a real estate mortgage. But which type of loan is right for you? Whether you’re looking to upgrade your current home, buy your first home or start buying rental properties in Rochester NY, you’re going to need to be savvy when it comes to financing. So pay attention. School is now in session!
The traditional route taken through banks, credit unions and other home mortgage companies is a secure way to finance a real estate investment. Rates are currently hovering around 4.25% for a 30-year fixed or 3.75% for a 15-year fixed rate. Be aware that traditional lenders have tightened their lending criteria. Most require a credit score of 680 or better for approval.
Seller Carry Back
This method is a form of owner-financing in which the seller agrees to carry the note for your purchase. This will happen when you find a seller that owns his/her property free and clear. They don’t want the property anymore, but they don’t mind receiving a monthly payment on it. Most of the time, however, the seller will place a time limit for when the note must be paid in full, typically, between one and five years. This is a great way to finance a real estate investment as long as you realize you’ll need to refinance later.
The “seller second” means that the seller provides a second mortgage. Typically, the second will be just large enough to cover most of the down payment. For instance, if you know you’re pre-qualified for a loan that will require a 20% down payment, you should make an offer contingent on the seller carrying a note for 20%. This way, you will get into the property without using any of your money and the seller gets the bulk of his equity and makes the deal.
The lease option allows you to get into the house for little to no money down, and it gives you the right to buy the property down the road, typically, in two or three years. This time period will give you ample opportunity to procure financing. Also, often you can arrange it so a portion of the monthly lease payment will go toward the balance of the home.
In Monroe County, real estate loans can be your best friend or worst enemy. The money is out there. Lenders would have you think that there is some big secret to getting a real estate loan, but how you find the loan and how you acquire it depends greatly on your credit score and your willingness to make phone calls and visit lenders. Once the lender understands that you are in good shape financially, the loan will come faster than you think. Just think before you borrow and the world will be your oyster!