Find Investment Property Financing and Get on the Road to Financial Freedom

As a real estate investor, there are a number of institutions you can seek out for investment property financing. Your options include banks, mortgage brokers, private lenders, and what are called hard money lenders. Many times the economy will dictate which source of financing you will choose. In this article you’ll learn about the differences between these lenders. Each institution has a place in this market. Some are better options than others.

The banks are the ideal place to apply for a loan. Their fees are low, and interest rates are usually much more competitive. However, they’ll want you to have a high credit score. An important point to keep in mind is that banks may not approve a high LTV (loan to value) like other institutions may. The LTV is the percentage of the amount financed in relation to the appraised value of the property. The bank may only approve up to 70% and other lenders may offer up to 80% of the appraised value. You must weigh your options carefully to determine the best financing option for you.

The easiest and most efficient scenario is to use a mortgage broker. The mortgage broker, unlike the bank, will shop your loan to different lending institutions. You can go to one company and they’ll present your loan to several different lending businesses. Generally a bank will only try to qualify you with their institution. If it doesn’t work they’ll just deny you and the process must start all over again with a new lender. A mortgage broker will only run your credit once. They will keep “shopping” your loan to different lenders until they find someone interested in the deal. The downside is that interest rates and fees are probably going to be higher for this service. When the bank can’t work the deal, the broker most likely can.

Private and hard money lenders really provide similar services. Both types of lenders will do things that ordinarily can’t be done. They don’t have to adhere to the guidelines of traditional lenders because they are lending their private money. This allows them to lend to whom they want and whatever project they choose. Their fees and interest rates are generally much higher, but when no one else can do the deal, they can. You can use this type of lender on an investment property that you’re going to flip (rehab and resell). The interest rate won’t matter because the fees can be calculated into the deal.

Now you should understand the roles of the different lending companies that will provide your investment property financing. If the economy is bad, sometimes it’s easier to negotiate with the private or hard money lenders despite the high fees and interest rates. When the economy is thriving, you should generally work with the mortgage broker or a bank. All of these lenders have a function within the real estate investing landscape. Use them to your advantage.


Why is Personal Finance Education Important?

Credit card and personal finance education on the agenda in NJ

New legislation in New Jersey’s state government would require personal finance education including a variety of detailed explanations on credit and debt terminology and consequences for card applicants.

The bill sponsored by New Jersey state Senator Barbara Buono and passed unanimously by the Senate Commerce Committee would require lenders to register with colleges and universities annually to announce their presence on campus.

The bill would also inhibit lenders from offering a slew of freebies to young adults that sign up for a credit card.

Buono commented on the importance of personal finance education saying, “Promotional sales gimmicks and students’ own ignorance about the factors playing into their personal credit and credit card debt result in many young adults getting in way over their heads. By informing them of the facts and eliminating sales gimmicks, we can hopefully empower students to make better credit decisions.”

As the bill moves through the full senate, the Philadelphia Inquirer is reporting that campus officials generally support the measure.

Rowan University spokesman Joe Cardona hailed the bill as important legislation. At Rowan, credit card companies have been banned from on-campus solicitations for over 10 years, reports the Inquirer.

Uptick seen in personal finance education

Attendance at personal money management classes is up both in the classroom and online, but why is personal finance education important?

The Wall Street Journal is reporting significant increases to education and “financial literacy” classes that are hosted at local community spots, universities, and online from educational institutions like MIT.

Some people hoping to learn about the effects of the credit crunch, the status of the real estate market, and economic theory are apparently turning to OpenCourseWare financial tools which are much like a virtual class to learn the importance of finance.

Lecture notes, study guides and exams are available from this online offering of more than 180 business and financial education classes from nearly 250 universities globally.

High school students are also taking more personal finance education classes as the economy increasingly impacts how they will handle credit decisions in college and their plans for future careers.

Schools across the nation are reportedly realizing the importance of personal finance and making personal finance education courses and know-how a top priority.