Real Estate Investing 101 Understanding the Different Types of

Real Estate Investing 101 Understanding the Different Types of Lenders

The changes in financing options available for residential investment properties over the last 5 years are staggering. Lenders have relaxed the credit and income guidelines for qualification that formerly deterred many would-be investors from entering the real estate. In addition, the down payment requirement has been eliminated for borrowers who qualify. This article surveys the landscape for lenders offering residential investment financing products.

Types of Lenders:

The lender landscape can be broken into the following broad categories:

Conforming
Alt-A
Non-Conforming or Sub prime
Hard Money

Each of these offers loans for residential investment properties ( 1-4 unit properties).

Conforming
Conforming lenders are the A-Paper mortgage banks that cater to borrowers with excellent credit history and the ability to document income. Conforming banks offer loan products that can be considered plain vanilla in todays world of interest-only ARMs and low down payment loans. In terms of investor loans, conforming lenders offer...