Is now the time to buy investment properties?

There probably is not a better return on your money than real estate. The number of houses out there for sale out way the number of buyers. So the demand is down and so is the price to buy homes. The biggest challenge in this current market is your credit score and loan terms. Banks have cracked down on credit to the point that it has made it hard for some investors to buy investment homes. The other challenge in this lending market is the type of loan you qualify for. Over the last 10 years there were all types of creative loans in place for self employed people that cannot document any income. Basically the higher the risk of the loan the more down payment you are required to have.


Low documentation loans on investment properties
During the years past you typically on a low documentation loan needed around 10% down. With the current market on low documentation loans on investment properties you may be required to put down 25% to 30% down payment. These types of loan terms may be less attractive to most investors. There are also a lot of banks that quit offering low documentation loans to self employed borrowers. So getting a loan with some banks may be impossible in this current market. If you have plenty of cash in the bank and can prove income you can find some real attractive deals in this current real estate market.

Full documentation loans for investment properties
If you are in the market to buy investment properties and can show income, you can be well on your way to getting some of the best deals on investment properties. Most of the property values have fell all around the country, mainly because everything was over priced. The demand drove everything so high that the market is re-adjusting now. So this is the time to buy if you have the right credit and financial circumstances.

Let’s re-cap, you need to have at least a credit score of 720 or above. You will need minimum of 10% down depending on how you document your income. This is pretty much it in a nutshell. With the current market and all the good deals on real estate, if you have the right credit and documentation this is the best market to buy investment properties.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

The Feds cut rates, but mortgage rates go up -Why?

Most people think if the Federal Reserve cuts interest rates, mortgage rates will go down as well. This simply is not true. The rates you pay on credit cards, auto loans, and mortgage rates are not set by the Federal Reserve. However the Federal Reserve does affect what is known as the Federal Fund Target Rate. Here are the details.

Federal Fund Rate
The Federal Reserve meets on a regular basis to monitor the Federal Fund Target rate. They decide during this meeting whether to increase or lower the rate. So the target is the rate. The real rate changes daily, but is usually real close to the target rate determined by the fed. The Federal Fund Rate is the rate that the banks charge each other for overnight loans. If a bank is low on funds it borrows the money from a fellow bank. The loan will be based on the Federal Fund rate set by the Federal Reserve. Banks are required to keep a certain amount of reserves in their bank or vault, typically around 10%. So at the end of the day if the bank only has 9 % reserves in the bank, they are required to borrow the rest from another bank at the Federal Fund rate. Understanding the Federal Fund rate is key to understanding why a rate cut with the Federal Reserve does not dictate mortgage interest rates.

Investment Groups
Now we are going to take a look at how investment groups dealing with mortgage paper do business. These groups of investors convince pension managers and insurance companies to invest their money in their investment fund. They then turn around and lend that money to people like you and me that need mortgages. Typically these investors will turn around and sell these loans on the secondary market at Wall Street for a nice profit. The process is continued over and over.

Mortgage backed Securities
Let’s assume you are the head of the investment fund. Your job is to make as much money as you can on the loans you have in your portfolio, so you can sell them easily on Wall Street. So the higher the interest rate for the borrower the more money everyone makes. Wall Street will bundle these loans which are commonly called “mortgage backed securities.” These securities are traded on Wall Street just like any other stock. As long as investors on Wall Street are buying mortgage backed securities all is good.

As the head of a investment fund are you going to be more worried about the Federal Fund Rate (the rate banks charge other banks to borrow money) or will you be concerned with the markets performance of mortgage backed securities? If you guessed mortgage backed securities you guessed right. The manager will be more concerned about how the market is dong for what it has to sell in its pool of loans. So the mortgage backed securities market dictates interest rates we pay.

So it is very simple to see that the Federal Reserve rate is the rate at which banks borrow money from each other overnight. This will not have much of an affect on how consumers borrow money over 30 years. However the lowest rates in history were at a time when the Feds cut interest rates at an all time low. So indirectly the Fed Fund Rate can affect mortgage interest rates. But it is important to understand that it does not directly affect mortgage rates. The Federal Reserve affects financial markets, which in turn could affect mortgage interest rates down the road. But typically mortgage rates are affected by the market for Mortgage Backed Securities. So if the Federal Reserve drops rates on Monday, that does not mean interest rates will drop on Tuesday.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Learn the “Correct” way to buy a home so it’s not a disaster.

Buying a home is the single biggest purchase you will ever make. Surely you want to make sure it s a smooth process. We are a society that likes to touch and feel. Kind of like trying to buy a car, you want to take it for a test spin before you buy. Unfortunately that is not the way it works in the real estate arena. You will find that most “seasoned real estate” professionals will not jump in there car to show you a home until you have secured financing with at reputable lender. With the current credit crunch and liquidity problems with banks, you better make darn sure you can secure financing. Even individuals with good credit are having issues getting financing secured. Here are the steps to follow:

Get Pre-Approved not Pre-qualified.
Getting pre-approved means you have a lender verify all documents to support the loan approval. Most lenders will run you loan through a automated engine. Once everything is verified and ran through either Fannie Mae or Freddie Mac engine you should be approved at that time.Pre-qualfied means that someone has taken your information over the phone and has not verified anything other than your credit report. This type of approval does not mean jack hill of beans.



Meet with your lender whom has approved you.
This is an important part of the process, so there is no misunderstanding on loan terms. Make sure you understand your payment interest rate etc………..


Find a reputable and seasoned realtor.
Finding a seasoned reputable realtor is so important; the reason is they need to understand the current market, and what to look out for on your behalf. A realtor’s job is to look out for your best interest. Once you have been pre-approved, then the realtor will have a better understand as too what type of negotiation process to start on a home.



This process is the best way to assure your home buying process is as smooth as possible. I am sure you hear of the nightmares out there, typically this is because the proper process in not followed. The end result is not good one. Lenders are looking at your credit scores very close now. Make sure before you start the process you pull a current copy of your free credit score report. That way you already have a idea where you stand.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, Internet identity theft software, secure credit cards, and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

What's My Credit Score?

If you’re applying for a loan or credit card, your credit score could have an impact on your interest rate and loan term. So what is your credit score and what does it mean? What does it say about you? Credit scoring is how creditors or lenders assess their risk when lending money to you. They look at your score and it indicates to them how financially responsible you have been in the past.

Your credit worthiness is calculated by credit scoring agencies and bureaus. You should get a copy of your credit score at least once a year and make sure that there are no mistakes or omissions in it. You can get this information for very little money and sometimes for free. Your actual score will be between 300 and 900. Higher scores are much better and can get you great interest rates, longer pay-off periods or terms, lower fees and less paperwork in the application process. Low scoring applicants are usually rejected all together or they are offered high interest rates, high minimum payments and more fees. Sometimes low scoring applicants are accepted based on their employment history or other factors, but generally aren’t as trustworthy as their higher scoring counterparts.

Is your score a good score? 650 or higher is a very good score and will generally earn you the very best terms when applying for loans. If there are a few minor problems with your credit history, such as a couple of late payments in the last few years, then you can score between 620 and 650, which is still a good score. You may run into a few problems with this score, but generally it is still pretty good. You’ll probably end up with slightly higher interest rates than people with excellent credit. Scoring under 620 puts you into a risky category. You may still be approved for a loan, but it will be at the highest interest rates and you may be considered a big risk to lenders.

Things that affect your credit score include your borrowed money payment history, late payments and missed payments. Late and missed payments on a credit card or loan are very big considerations when calculating your credit score. You should try to never make a late payment because it blemishes your record for years. Another thing considered when figuring your credit score is your debt to income ratio. If your level of debt is very high relative to your income, or if the cards you have are close to their spending limits, then your score will probably go down.

If your credit history is very long and you’ve had revolving credit for years, then your score may drop. Trouble paying things off completely makes you look like you are in over your head, or you’re just not trying to pay off your debts. Inquiries on your credit are another thing that is looked at. If you’re constantly applying for credit cards and loans, regardless of your acceptance or use of the instrument, then you look like someone who can’t afford the things that you’re trying desperately to get. Do your research before choosing a loan or credit card to apply for. Multiple inquiries on your credit can hurt you in the long run. Your credit score ultimately depends on you.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, Internet identity theft software, secure credit cards, and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.