When applying for a mortgage, you must do everything possible to please the lender such as having adequate cash reserves and having a good credit score. Let us look at how to invest in French real estate by considering certain factors during the application process.
The first thing you should know when applying for the loan is your lending limits. One of the requirements of an investment mortgage is that you should carry up to ten loan limit. A good lender can help you come up with both long and short-term plans for you to maximize this loan limit. Not all banks have this loan limit since most big banks only provide investors with four loans. It requires some hard work for you to get a lender that goes beyond the loan limit.
You can also succeed in purchasing the rental property by developing a reliable and strong team. The lender should be investor-friendly and should comprehend the investing landscape well. This will save you time and efforts of explaining your objectives to them.
Though a mortgage broker can be efficient, you need a direct lender in building rental properties’ portfolio. A broker can change the lending standards or leave you stranded when you need them the most while a direct lender brings you close to the decision making process. Research on the top lenders to get the best rates before you can apply for the loan. An appropriate lender will make the process easy as long as you meet all the requirements.
The number of loans you have also determine how strict the credit requirements will be on you. For instance, 4 loans need a credit score of 630. For you to get a mortgage for rental property, you must also have enough cash. This is different from the initial down payment.
You must have adequate cash reserves per every property for at least six months. If you are a landlord of a primary residence, the lender will demand that you have mortgage payments for at least six months in the bank. A lender can give you an estimated monthly payment when you have identified the price of the rental you intend to buy. This will help you save for you to accumulate enough cash reserves for it.
Your lender also requires you to produce the receipts to confirm that you have been earning income for at least two years. W-2 income affirms that you have been consistent in working at one industry for two years.
In the case where you run your own business or are self-employed, you will be asked to provide the tax returns for the last two years. Other documents such as profit and loss statement and CPA letter are also crucial to the lender. The CPA letter confirms that the 2-year tax returns are valid. You can diversify your strategy of building wealth through purchasing rental property. Start investing in real estate today and enjoy the benefits in the future.