To my dismay, I have seen many people who would have been “slam dunks” for financing in 2006 get completely shut out of the capital markets in 2010. Whether commercial or residential, the factors which determine who gets money from commercial banks (or any institution for that matter) is pretty consistent for all property types. Lately the characteristics of those who have been successful in obtaining financing have been the following:
- 720+ FICO score
- verifiable and sustainable employment or self employment for the last two years
- 12+ months of mortgage payments in an immediately liquid account
- a minimum of 25% in reserves if planning on purchasing an investment property
- two years experience as a landlord/property manager, if purchasing an investment property
- no late payments or foreclosures on real estate debts
These are the basic requirements as you can see, however, right now, that ‘s what the lending world wants. Knowing these factors can help to make or break your deal. Study them and learn them, as they are the fundamental essentials which are involved in each and every deal in our current marketplace for money. If you don’t meet the requirements for the various line items, bring others in. Getting financing nowadays is tough, but it doesn’t need to be impossible if prepare appropriately.