What you need to know when obtaining a loan for a non-owner occupied home

Purchase Money Financing for residential real estate for investors remains readily available and extremely competitive. Investors, however, must be well qualified with high credit scores, “documentable” income, and ample liquidity. The best rates and terms are available for those willing to make a down payment equal to 25% of the purchase price. Financing remains available for those wanting to put down only 20%, but the interest rate will be approximately ¼ of a percent higher.

Non‐Recurring Costs:

Fees include Title Insurance, Escrow Fee, Appraisal Fee, Lender Fees, One Point Origination Fee, Processing Fee, and other standard fees associated with the purchase of residential real estate in California. The total “Out of Pocket” investment required for the above scenario could be as much as $60,000, including the down payment, the non-recurring closing costs, and the prepaid interest, property taxes and insurance. For buyers with ample liquidity but insufficient “documentable” income, there are “hard money” options available. “Hard money” loans, however, require as much as 30% down and cost as much as 5 points, and they usually have interest rates in excess of 10%.

Cash Flow & ROI:

The recent decline in the housing market may provide an excellent opportunity for those looking for a long term investment or additional monthly income. Determining the potential monthly rent and expenses is important in such transactions. The experts at JVM can assist with your analysis of a rental property as an investment option.