Financing, how does it work??? - Posted by sarkis

Posted by Patrick S. Lawson on May 04, 2006 at 11:00:07:

As a rule you should consult with a mortgage professional before entering into a purchase agreement. A mortgage professional will be able to tell you how much you are qualified for and what potential hurdels you may face. This is especially true when looking for rental properties.

How will you know if a property will cash flow if you have no idea what your debt service will be?

Are you working with a realtor? If so must all purchase contracts provided by the board of realtors has a financing contingency clause.

Financing, how does it work??? - Posted by sarkis

Posted by sarkis on May 04, 2006 at 10:48:49:

I am planning on purchasing a rental property. I have found many from which to choose. all at good prices.

My question is about financing. Now, let’s assume that i found the property i want to buy. the seller has agreed on a price and we’ve both signed an agreement to buy. i wantto finance the property which brings me to my question:

Should i have financing arranged before i sign an agreement to buy?? I know i can put a clause in the contract that would make the purchase contingent on my obtaining financing buy is that the right way to go???

HELP. i want to know what the RIGHT or BEST method of financing a house is. should i get pre approved now??? before i’ve even found a hous??? HELP

Another question: i have no cash to put down and just started building credit a year ago. i have no problems on my credit report either. Is it going to be hard for me to find financing? many of the properties that i’m looking at are mulit units that are relatively cheap(below market value) Any advice will be dearly appreciated.


Re: Financing, how does it work??? - Posted by John Corey

Posted by John Corey on May 13, 2006 at 07:22:41:


People would not make an offer to buy something if they did not think they knew what it is worth.

People should also not make an offer if they do not know what it will cost monthly to own a property. Unless you are paying all cash for the deal (real cash - not a loan) then you need to understand what you need to pay each month.

There are a lot of loan options out there. Way more than any one person can keep up with. That does not mean you can not identify a few options so you can tailor the price and the terms of the offer to match the financing that will be used.

Most of the time the best way to sort out the different financing options is to speak with a mortgage broker. Pick someone you can work with. In particular, pick someone who already invests and has worked with different investors. Someone who knows what is important to investors vs. a traditional home owner’s needs.

In a broad way you would do the same if you wanted to buy a property that needs work. You need to get quotes from contractors who can do the work before you make your offer in most cases.

The price is relative to the costs of ownership and financing is one of those costs. If you could borrow at zero percent then the offer price might be higher compared to if you have to borrower at 15%.

John Corey