rental property loan papers

Are you considering taking out a rental property loan but can’t decipher between the different financing options? We’ve got you covered. To learn more about the different types of rental property loans and which one is right for you, continue reading the article below.

Conventional Loans

Conventional loans are the most common type of rental property loans. Traditional lenders such as banks, mortgage brokers, and credit unions offer these loans. One of the most distinguishing qualities of conventional loans is that this financing must meet Fannie Mae or Freddie Mac guidelines.

Is It Right for You?

Traditional lenders rely on an investor’s credit and financial history to determine the approval for a conventional loan. So, if you’re someone with a high credit score, you’ll most likely receive a lower interest and down payment rate.

Private Money Loans

Private money loans offer some of the most flexible and immediate financings for properties. Private lenders offer these loans, not banks or credit lines. This means that the terms and fees for private money loans can be easily negotiated and customized to an investor’s circumstances.

Is It Right for You?

If your credit score is lower, asset-based private lenders may be a highly beneficial option to consider. Investors who need fast financing with more customized flexibility will also thrive with these loans.

Blanket Mortgage Loans

Do you need to finance multiple properties at once? Private lenders and mortgage brokers offer blanket mortgage loans so that investors can finance multiple properties under one loan. These loans also use a method known as cross-collateralization. This means that the multiple properties financed under one loan serve as collateral for each other.

Is It Right for You?

Blanket mortgage loans will be the most beneficial for investors who need fast cash flow to finance multiple different rental properties at one time. Since private lenders often offer this loan, investors who need customized loans may also benefit from blanket mortgage loans.

Home Equity Loans

A home equity line of credit loan is also common for rental property investors. Unlike credit-based loans, investors can use the current available equity from their existing property to fund their next property. These loans usually have a fixed rate and require investors to make equity payments over a limited period of time.

Is It Right for You?

Home equity loans can be highly beneficial for investors who don’t have any other access to funding. Although these loans often have higher interest rates, investors can have fast access to cash to close on rental properties and earn their money back.

Although deciphering between the different types of rental property loans can be difficult, investors must examine these financing options to find the best fit for their circumstances.

If you need additional assistance finding suitable rental property loans, we’re here to help. Here at LJC Financial LLC, we provide some of the most customizable and effective rental property loans in Texas. To learn more about our rental loans, check out our website.