Investment Mortgage Guy

Lending sources continue to tighten guidelines throughout 2008 on investment property financing. Wall Street investors that lend money to create mortgage backed securities on the secondary market provide mortgages for individuals to invest in real estate are sitting on the sidelines. Only two companies are left lending right now -  Fannie Mae and Freddie Mac. Recently both companies have seen their stock prices plummet however, the government assures us that these companies will remain financially sound to lend or they will step in to help. Without these two institutions making mortgages, as a real estate investor your last alternative would be to get financing on a short term arm basis at your local bank.

In order to ensure only high quality loans are originated from this point forward, underwriting standards have sharply increased. There were several factors that changed this year. First, the down payment required on an investment property changed from 10% to 20% down. This has restricted a number of investors from entering the market to buy more properties. They simply don’t have enough cash reserves required to invest. Secondly, credit standards tightend. A 680 credit score is now minimum standard to qualify. Other changes include the number of financed properties owned by an investor.Freddie Mac lowered the number to 3 investment properties per individual and rumor has it the Fannie Mae will soon follow.  Cashout and seasonng guidelines (the length of time an investor has owned the home before they can use the appraised value) were also changed by Freddie Mac. Fannie Mae has not yet made the change.

I believe we are heading for tighter guideliinesyet to come until the housingmarket turn around, If you qualify today, you should seriously look at buying before you potentially get squeezed out. There are less buyers and more opportunties!

Rob Bonahoom - Mortgage Coach - “We help Regular People Build Wealth in Real Estate”.