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The Best Real Estate Financing Options

The Best Real Estate Financing Options

Most investors are attracted to real estate. It’s a fairly safe industry that can help you diversify your investment portfolio and leverage your capital as well. More novice buyers are getting into the industry and those who have been in the market for a considerable period are looking for larger loans as their equity increases. Whether you’re purchasing your first home or your 10th rental property, you likely need financial aid to close the deal.

There are numerous real estate financing options and each has its pros and cons. Even when you think it’s impossible to make a deal, real estate specialists can be able to guide through the procedure and make it happen. With commercial property prices on the rise, it is important that you assess your options. Getting the right type of loan can help increase purchasing power and boost your cash flow as well as the return on investment. However, with the numerous lenders to pick from and real estate financing options to pick from, it is easy to become overwhelmed. This article covers some of the best options in regards to real estate financing.

Conventional Loan

If you’re moving into a house that does not require repairs and you have a fairly good credit score, then a conventional loan is ideal for you. The following information is taken into consideration when it comes to these types of loans:


-credit score



Home buyers usually need to make a 5 to 25 percent down payment of the buying price. Conventional loans need to meet the strict guidelines before they are issued. However, because there’s less risk related to conventional loans, you get to benefit from lower interest rates.

Hard Money Loans

These types of loans are usually used to purchase homes that are in poor condition and require repairs. Unlike conventional loans, they are backed by private money from wealthy investors.

The requirements in these types of loans are less regulated and, they can be fairly easy to secure. Most real estate investors look for hard money loans due to their quick turnaround. Lenders will generally agree to make the deal based on the property’s value instead of the buyer’s credit history, assets, income, and debt.

However, even though these loans are great for property investors and flippers, they can be rather expensive. Hard money loan’s interest rates are quite high compared to other loans. As such it is imperative to have an ideal strategy on how to get out of a hard money loan and secure a longer-term loan with relatively low-interest rates after a few months.

Portfolio Loan

If you are having a hard time meeting the requirements in a conventional loan, then you may want to turn to portfolio lenders. Any person who does not have an acceptable credit score and is purchasing a property that does not fit into the norms in the category may want to consider this real estate financing option.

Portfolio loans are basically mortgage loans that are held in a financial institution’s portfolio. They aren’t sold on the secondary market and don’t need to comply with the guidelines set by the investors of the secondary market. The lenders of these loans are usually more flexible when granting loans but usually charge higher rates. These loans are certainly perfect for real estate investors with situations that are outside the conventional mortgage underwriting guidelines. To know more visit the website at

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