How Will You Pay for Your Purchase?
Most beginning real-estate investors need a loan to pay for their initial purchases, and sometimes even investors who can pay cash for properties choose to secure a mortgage instead of depleting their cash reserves. So where will you go to find a loan? You can start at the bank where you have checking or savings accounts. If the bank does not make real-estate loans, it can surely refer you to someone who does.
Ask friends if they have worked with a loan officer who helped them through the loan process. If that doesn't work, look for lenders who advertise in the “mortgage” category in the Yellow Pages of your local telephone book.
What Your Options Are
The type of loan you can secure will depend on many factors, including the property you intend to buy — a house, a multifamily dwelling, land, or commercial real estate. Different properties qualify for different types of financing, and your credit history will have an impact on all of the loans you are offered.
Savings associations and savings banks have always specialized in home mortgages. Commercial banks sometimes prefer to make short-term construction loans that are paid off with another loan when the job is complete. They also finance larger commercial projects and make many other kinds of short-term loans.
Credit unions have become a major source of mortgage loans in recent years. State and federal laws that control many banking activities do not apply to credit unions, so their loans are sometimes more flexible and can be tailored to meet your needs. You do not usually have to be a member of a credit union in order to use its services.
When you apply for a real-estate loan at a bank, credit union, savings-and-loan association, or other lending institution, you will work with a loan officer who evaluates your financial information in order to determine which types of loan products are suitable for the type of purchase you intend to make. That person can be an important contact as you move forward to acquire properties.
