Real Estate Investment News | Investments

Real Estate Investment News

Article by Rick Smith

Real estate investments received a boost has arrived with the news from Fannie Mae changing the number of financed properties allowed. Previously, the maximum was 4 financed properties allowed per borrower, and as of March 1st 2009, the maximum can be up to 10 properties owned. The updated policy applies to individual or joint ownership of one to four unit properties.

Real estate investment could play a key part in the housing recovery. The new opportunity to buy investment homes using conventional financing should help expedite the sale of foreclosure inventory that has been stymied by the requirement for investors to pay cash.This new source of financing does remove a large barrier to investing, however, it does come with some conservative qualifying guidelines. Fannie Mae is primarily looking for experienced real estate investors with high quality credit. Real estate investment guidelines include the following:

1. Purchase of a one unit investment property requires a 25% minimum down payment.

2. Buying a two to four unit property requires a minimum down payment of 30%.

3. A real estate investor must have a minimum credit score of 720 in order to qualify.

4. The investor cannot have any mortgage delinquencies within the last 12 months.

5. There cannot be any history of bankruptcy or foreclosure within the last seven years.

6. Rental income documentation with two years of tax returns showing all rental property.

7. Six months reserves of principle, interest, taxes, insurance is needed for each property.

The real estate investor must complete and sign a 4506 form granting the lender permission to request copies of federal tax returns directly from the IRS. Prior to the loan closing, the lender must obtain the IRS copies of the tax returns or the transcript and validate the accuracy.

The policy change creates a positive move for the economy, although, stringent guidelines will narrow the field of qualified investors, and leave many on the sideline. However, this situation may lead to a growth of real estate investment partnerships, groups, and clubs, which are designed to pool financial and credit resources to leverage the buying power of investors.

People with good credit and stable income could partner with others who have the necessary funds available. The details can be worked out to specify the level of involvement for each investment partner, distribution of money, and the process of the real estate transactions.

About the Author

Written by Rick Smith: Current mortgage rates and information for mortgage loans, and FHA loans, plus details about new homes in San Diego and Riverside area

Source: http://investmentshowto.com/real-estate-investment-news/

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