Getting a Loan
Finding Capital for Your Property
Learning and utilizing the proper funding opportunities is vital to your next property purchase. This page provides key terms, avenues and strategies, which will help you make this important decision. Establish your end goal for your investment and then do your due diligence research.
- Family Home: You’re just married and ready to settle into a new home with your new family. Maybe you’re looking for a long-term, 30-year loan for a single family. The best option, in this case, will likely be a Federal Housing Administration (FHA) loan or a conventional loan.
- Single: Perhaps you’re a young to mid-aged professional ready to invest in your first home. Is a multi-family home wherein you live in one unit and have tenants in the rest of the units a preferred choice? This way you’ll have cash flow or potential for the future. In this case, you’ll most benefit from the low down payment provided by an FHA loan or, if more cash on hand is available, a conventional loan.
- Investor: Whether this is your first home investment or your 20th, you’re looking to add a multi-family property to your portfolio. Be sure to consider the best funding strategies and avenues when comparing various lending avenues such as conventional, private, government and hard money.
- Repairs: What amount of repairs are you willing to take on? Are the home repairs, if any, cosmetic or more extensive – remember, the more extensive, the more likely you will need a larger budget. This scenario will lead you to an FHA 203K and/or a conventional construction loan.
Think about your goals and write them down, then compare each lender’s offer regarding the best interest rate, down payment cost, loan-term period, PMI cost, etc.
The overall message is simply be prepared and confident. Remember, you hold the leverage in seeking the right loan offer. But before you step up to the table, make sure you already have a good idea about where you stand on your credit (note, scores should be 660 or better), work status, bank statements, debt-to-income ratio, etc.
Ultimately, presentation is everything. Organize all of this information before you begin to shop around for the loan you want. There are hundreds of lenders, from banks and the government to private sources all seeking viable customers like you.
Quick tips and steps you can take today:
- Get organized and take notes.
- Do your research. It’s the 21st-century; knowledge is power is technology. Great starting points for your research are YouTube, Google Search, and BiggerPockets.
- Download a budget app or credit score app, like Mint or Everydollar.
- Based on your experience, read each article and visit each provided link.
- Don’t be afraid to use a loan officer; they may have relationships with various banks and be able to help you shop around for the best deals.
- If you are a first-time homebuyer with limited cash, an FHA loan may be your best option. The down payment for an FHA loan is 3.5 percent versus a conventional loan, which will typically require an 18% to 20% down payment. There are various circumstances of pros and cons for both, take the time to compare.
- Once you have your pre-approval letter, and/or any other documentation showing proof of funding, contact Hamlet Houses for the next step of expert assistance in shopping for your new home or investment purchase.
Stay informed on strategies, tips, statistics and multiple listing services (MLS) listings by following Hamlet Houses.
Article PDF Links
- How to Prepare to Finance a Home
- When Choosing a Lender
- Loans and Lending Terms
- Finance a Home Creatively