Real estate investment has become very popular in the last few years. With all kinds of “no money down” real estate courses being sold on infomercials and in every home business or investing publication that exists, people have rushed to buy properties for investment purposes. Unfortunately, many of these people are not interest rate savvy and are doing themselves a disservice by not refinancing some of their investment property mortgage loans.
The difference between taking blind chances and taking calculated risks is knowledge and experience. When a professional takes a stroll across Niagara Falls on a tightrope, what seems like a terrible risk to observers amounts to a walk in the park to him; because he knows what he is doing, and has done it before. The same principle applies to buying, financing, selling, fixing, and managing houses. Why do you suppose so few brokers actually buy/sell/rent their own houses versus entrepreneurs? I think it’s because listing, selling, and managing houses for a fee incurs no risk of money or credit; while investing and lease/Optioning does.
The yield spread premium on mortgages ranges between one and two “negative points”. CitiChaseWellsAmerica will sell this loan on the secondary market, and pocket the premium, which will never be disclosed to you. The rate you will pay is spelled out in the promissory note. The effect of your points will be spelled out in the APR, or Annual Percentage Rate, which is disclosed on the Truth in Lending, or Reg Z disclosure.
Make sure your credit report (with all three major bureaus) is accurate. In some cases, a credit report will still show derogatory open/active accounts after a bankruptcy. Most likely these accounts would have been included in your bankruptcy, but “errors happen”. Be certain your report is no longer showing active derogatory accounts that were closed as part of the bankruptcy. Otherwise you’ll be recording bad credit on top of your bankruptcy (the credit equivalent of committing a crime your first day out of prison).
First you have to establish why you were turned down for your loan. Was it lack of credit or just bad or low credit scores? Your Best Mortgage Broker Brisbane should be able to tell you why the lender declined you.
Always borrow more than you need to buy and repair. The job will always cost more, take longer, and yield less profit than you expect. You better have a cash reserve.
APR, or Annual Percentage Rate, was originally designed to help borrowers compare mortgages. I won’t go into the mathematics involved, but in principle APR was a good idea. In practice it has turned out to be useless. Lenders do not all use the same inclusion methods in calculating APR. To add to the confusion, adjustable rate mortgage calculations are notoriously misleading. But that’s okay! APR involves two variables, note rate, and closing costs, and all you need to see is on the Good Faith Estimate.
It is important to understand what a “no points” mortgage is. This means that the points are not charged to you upfront. They are usually included in the loan in the form of a higher interest rate. You can decide on the tradeoff between higher rates and higher fees.