You know that we take a different approach when we review an application, either generated by a mortgage lender or broker, a real estate agent or directly from the ultimate borrower. If you’ve never applied for a loan from ABO Capital and are curious how we finance investment real estate, it’s really fairly simple. We apply basic, common sense guidelines and look at the entire story, not just individual guidelines. We don’t just go down the list and check off all the boxes that a bank would.
When you apply for an investor loan from a bank, there are actually two approvals taking place. One for the borrower and one for the property. The bank will want to verify there is sufficient income for the borrower to pay off the loan once repairs have been made. That typically means copies of recent pay check stubs, W2 forms and two years of income tax returns. Employment must also be verified showing at least a two year history of employment.
There will be a down payment, as much as 30 percent of the sales price or more depending upon the loan program. That means you can expect to provide copies of your most recent bank statements showing there are sufficient funds in the bank to cover not only the down payment but closing costs, interest and third party fees as well. There are also minimum credit score requirements which can vary from bank to bank but many residential real estate investor loans ask for a credit score of 720 or even higher. That score represents excellent credit and not every real estate investor has a score in that range.
As it relates to the property, the bank will order an appraisal to make sure the property will reach the needed value once repairs are made. An appraiser will provide records of recent sales in the area that are similar to the one being financed. Our loan programs also require a property appraisal similar to what a bank will need. But beyond the property appraisal, this is where the loan approval process becomes much easier when you work with ABO Capital.
First, there are no minimum credit score requirements. Forget worrying about having pristine credit. Yes, we want to make sure we’ll be paid back when the work has been completed but we do not rest an approval entirely on a three digit number.
We of course will also review a title report from a title company and order other third party services but they’re standard with most any mortgage loan application. In short, when you’re ready to invest, we’re ready to help with a simple, streamline loan approval process.