Mar 18, 2011

2011 Bank Rules for Real Estate Acquisitions

In 2011, banks can still finance up to 10 properties (they count 1st and 2nds as one loan in most cases - thank goodness).  If it's for a primary residence, there's really no limit to how many mortgages you can have - so long as your normal debt to equity & income ratios, credit, income, assets, etc. still pan out.  

One can also use existing assets (notes, equipment, A/R's, home equity or even your stock portfolio) as collateral for other loans - typically at a 50% collateralization rate (that is, banks may take your $100K stock portfolio and be willing to lend you $50K, for example).

No assets to pledge?  You'll still need 2 year's worth of W2's and verifiable income (pull out the tax returns) to qualify.  And good credit is pretty much a must too in this market.  If you want good rates.

Converting a hard money loan into a conventional loan is do-able.  BUT, the standards for a refi are just as strict as they are for a new purchase.  Keep that in mind.  And, typically, you can't pull your money out of the property for at least 6 months on the refi.  Gotta wait it out for 6.  Dumb rule, I know.

The hard money guys?  Make sure they approve the property first.  They'll charge a $900 setup fee, 18% interest only, and they'll want 25% as a down payment, no prepayment penalty, but they do require a minimum of 30 days servicing.  Make sure you plan your escape before you enter.