What should real estate investors expect from the mortgage lending industry this year?

This could be a year of massive changes in the mortgage lending industry. What can investors expect? How might it impact them, their plans, and the best strategies for making money in real estate?

Interest Rates

If there is one thing investors can count on this year, it is probably higher interest rates. Most of those in the game now have never experienced normal interest rates, or high interest rates. Investors have to build this into their models and plans. It will affect the cost of everything. On the bright side it could encourage more transaction activity, and lending.

Dodd-Frank

Trump has made a lot of noise about repealing the Dodd-Frank Act, and making it easier for mortgage borrowers to access credit. This may not be a fast or easy thing to change. However, doing away with these regulations which have really made things difficult for agents, investors, borrowers, and private lenders could make a big difference in the market.

Credit Scores

It is believed that millions of Americans are now experiencing rebounding credit scores as the damage of the crises fades out. This could flood the housing market with more qualified borrowers, just as the number of cash buyers is dwindling. However, it is also important to watch the effect of higher rates on the ability to maintain debt, and new credit scoring models which are being developed.

New Loan Programs

Expect to see a variety of new loan programs come into the market. Few anticipate a return to the good old subprime lending days, but lenders could develop new programs which push the limits, in expectation of a strong market, and relaxing of regulations under the new White House administration.

Demand to Borrow

With consumer and business confidence strong expect demand for mortgage loans to increase sharply. This could be vital for mortgage lenders and brokers who are facing a dramatic drying up of refinance activity.

Easing, but Not Easy

Just because lenders want to make more loans, doesn’t mean that we’ll see 100% no-doc or NINJA or NINA loans making a comeback just yet. Lenders have been used to demanding a lot over recent years. It may be hard for them to change. They like making the rules and staying in control.

Competition for Capital

While there is still a lot of capital out there, expect there to be more diverse demands for it. Recently it has been drawn to financing investment property loans in the US. This year, expect foreign markets like Italy which may bottom out to attract big funds, for more crowdfunding portals to be battling for back channels to sell loans, and for there to be an increased split in between the desire to fund residential buyers and investors.

Transaction Funding

Transaction funding will still remain the most reliable, efficient, and easy to access types of investment property financing for wholesalers and flippers this year.

What does the mortgage landscape look like for investment property loans in 2015?

While Bloomberg Business notes that mortgage underwriting is becoming “incrementally easier” in 2015, the feds have opened up the gate to begin raising interest rates. These factors will have some impact on real estate investors as they evolve and grow. But for now the most important question remains “what loans are available for financing investment properties?”

Transactional Funding

Best Transaction Funding continues to fill the gap for property wholesalers. It provides 100% financing for quick flips. Normally without any of the credit, income, or asset demands of other loan types.

Find out how transactional funding works here

Hard Money Loans

Best Transaction Funding will soon be funding hard money loans from 1M+ (minimum) for select, serious, and experienced real estate investors with solid deals.

Hard money loans offer asset based financing for those deals and transactions that don’t fit the transactional or conventional loan model. They provide fast funding, without the hassle of traditional investment property loans from conventional banks and lenders. They can be great for new acquisitions, rehabbing, and refinancing.

Blanket Mortgage Loans

A variety of new blanket mortgage lenders and loan programs have emerged over the last two years. These programs can help investors with bulk property purchases, may act as bridge loans to unlock pent up equity in existing portfolios, and may streamline overall debt financing for buy and hold investors.

Private Money

Private individuals continue to be keen to put their money to work in real estate deals. For now they can offer better terms and easier lending than conventional lenders. The downside can be the extensive amount of work and time required to line up these relationships and financing. There may also be a substantial pivot in this trend as other lenders become more competitive in 2016 and beyond, and as they can obtain high yields from CDs.

Leveraging IRAs

Tapping IRAs and other types of retirement accounts to fund real estate deals has become increasingly promoted among the investment community. Self-directed IRAs do have great advantages. They can even be used in tandem with private money, transactional lending, and hard money. However, investors should recognize that touching the proceeds of these transactions might hamper their tax benefits. Highly active flippers should also consult their tax professionals to see exactly what the tax ramifications are for them.

Conventional Lenders

Traditional banks and mortgage lenders still have a lot of catching up to do. This is particularly true when it comes to LTV, paperwork burden, and speed. More exotic loans are making a comeback, but these lenders are rarely of benefit to most investors in the current market.

Summary

Investment property financing is still plentiful for those that know where to go, and work with the best lenders for their investment strategy. Whether, and how fast main street banks will be to catch up will be to be seen.

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Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

Where can you find the investment property financing you need to fund your real estate deals fast?

While consumer mortgage credit can still be tough to find for regular homeowners there are an increasing number of options for investment property financing. Here’s a quick break down of where real estate investors can find the funding they need for their deals…

Transactional Funding for Wholesaling Properties

For those real estate investors needing to close fast, and who are serious about wholesaling properties with the least risk, for the maximum returns, Transactional Funding is absolutely the answer. Best Transaction Funding offers rapid 100% financing that checks all the boxes for wholesalers.

Hard Money Loans

While transactional funding may be the most appealing option for savvy real estate investors today there are scenarios in which slightly longer holds may be justified. Perhaps there are appetizing must-have deals you just can’t pass up on but don’t have an end buyer for yet. Maybe there are substantial profits to be had from taking few months to fix and flip, or bring a property to performing before reselling or refinancing. In this case hard money loans can provide easy qualifying and fast funding. Yes, we do hard money too, just ask.

Bulk Portfolio Financing

Commercial mortgage lenders have opened up the doors for for bulk income property portfolios acquisitions and refinancing. Some provide non-recourse loans, foreign investors financing and even stated income options. Some of these new lenders include B2R Finance, FirstKey Lending, and Rental Home Financing.

Government Backed Loans

Investors acquiring new personal residences might find FHA, VA, and USDA government backed home loans the best way to go for low and no down payment mortgage loans. They can also be great resources for investors to refer their retail buyer clients to. Local governments also offer a broad array of assistance programs, including well into six figures helping buyers with down payments in high cost areas.

Real Estate Crowdfunding

Crowdfunding can be great for filling in the gaps and launching new developments. However, as the space grows increasingly crowded real estate crowdfunders need to be aware that successful fundraising through this medium can require extensive strategy, marketing, time, and budget.