Due to recent events in the finance and banking sectors in the US, obtaining traditional financing for investment properties has become more difficult than ever before. Fannie Mae tightened their underwriting guidelines dramatically in 2009. Fannie Mae & Freddie Mac purchase the majority of all non-owner occupied investor mortgages originated through banks and lending institutions in the US.
Note: Financing for Non-US Citizens (with no social security number) has been discontinued by traditional US lending institutions. It is difficult, if not impossible, to find legitimate financing for foreign investors. We suggest seeking alternative financing in your own country for these properties…Feel free to contact us to discuss any aspect of financing.
Ideally, you should be prepared to put down 25% on any 2-4 family, and 20% down on any single family investment property at this time. This is partly due to the fact that MI (Mortgage Insurance) companies have stopped insuring mortgages on non-owner occupied properties. You should also be prepared to prove all of the income & asset information on your mortgage application with a paper trail (tax returns, W-2, account statements, etc…). Be prepared for the entire process from start to finish to take a minimum of 60 days to complete.
In addition, self-employed borrowers need to be prepared to face an even more rigorous examination, as lenders are now shying away from lending to self-employed borrowers (particularly newly self-employed borrowers).
Along with more stringent underwriting guidelines, the federal government has also placed strict limits on what fees lenders can charge in association with these loans. On the surface, this is good for borrowers however, on low dollar amount loans, the lender’s fees have been cut to the point where they are not particularly excited to go through the hassle of doing a loan to make no/little money. Many lenders have actually stopped writing low dollar amount loans altogether. These fee reductions have also made mortgage brokers obsolete on these low dollar loans so, be prepared to go to traditional bank-type lenders to obtain financing.So what does this all mean?
All of the above aside, it is still possible for US Borrowers to obtain financing on Investment Property. Most lenders are more likely to offer this type of financing to their current customers that they have a working relationship with. Check with your bank/lender for details. Make sure they are licensed to lend in New York. It also may be a good idea to check with a national lender like Quicken Loans to see what type of investor financing programs they have as well.
We have years of experience in helping investors with financing solutions and are pleased to offer guidance to all of our customers. Please contact us to discuss any aspect of financing your investment.