If one is about to step in the world of real estate investing, then one needs to be aware of the various financing options available. It is very important to search for all viable options for financing, as per the requirements of the individual. Following are the sources of finance for real estate.
Banks- Banks are the most preferred and obvious choice for the finance. Retail banks use their own money to make loans, hence there are very less chances for qualifying to it. Banks use their own rates and guidelines; hence the rates can sometimes be higher. The financing success rate depends upon the relationship of the borrower with the bank. Banks require less documentation formalities and hence are more flexible.
Bridge loans- This is an emergency measure which helps in prevention of foreclosure of the property. These loans require far less time for getting approval and can be repaid later. Bridge loans are for lesser time and have higher rates as compared to banks.
Mortgage Banker- Mortgage Banker can be referred as a freestanding unaffiliated company or it can also be a part of the bank. These may be banks, credit unions, an insurance company or any other big company like Sears. These can fund as well as close their loans or even keep them until the loans are sold.
Credit cards- this may be unknown for some people, but credit cards can be the best source of finance if required for short term. One can increase the limit and even negotiate the terms if used for short term finance investment in real estate.
Mortgage broker- This is an independent loan source. Brokers have access to many wholesale lenders. The broker then gives the wholesale price which consolidate the origination fees, and other miscellaneous price. Check for some discount rates here.
Insurance companies- Life insurance companies provide mortgage loans since long ago. This is mainly done against the cash value of a person’s policy. Insurance companies have huge amount of premium deposits and hence one can get finance at lower rates.
Mortgage Lenders- mortgage lenders are the only option available for people with bad credit or low income. Hence the lenders demand high application fees and hence they continue to benefit from the desperate needs of cash for borrowers. This is the last step advised for borrowers.
