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August 21, 2010


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I wonder if the requirements are the same for commercial rental property too.

Perhaps with rental property, a decent downpayment would be required now vs the days of 0% down...

Money Reasons, as an investor in real estate, I can tell you from experience that commercial properties work fundamentally in the same way. Most investors buy property under their established legal entities such as an LLC, in which case the lenders are interested in how much is the entity's net worth as well as whether it is established - and if so what kind of cash flow it is generating. One can always provide a personal guarantee.

For residential rentals, the down payment on rentals was never 0 down even in great times, unless one lied to the lender and mentioned they are buying it for themselves. Rental properties always require more in down payment, as well as a higher interest rate.

I'd like to specifically add to one bullet on the post above:

"Reduce your overall debt" - this is true. Specifically, if you are used to having an average amount of X on your credit card every month, even if you pay it off it full, it is beneficial to bring this average down as low as possible at the time of applying for a mortgage. if you are paying off your cc in full each month anyway, chances are you have the cash. Bite the bullet and pay cash for purchases in the month you apply for mortgage.

Great post. I am actually in the process of buying a home, and know how important it is to have an excellent credit score to get the best rate.

If you've had credit problems, like late pays, get a credit repair manual and ask to have them removed. If you go about it the right way, you'll be able to get at least a few removed and improve your credit score.

What if you have declared bankruptcy like I have before? Then I believe you will need to do more to improve your credit score, and then have a better chance to get a mortgage. Even after you have filed for bankruptcy, as long as you are on the way to improve your credit, you are still eligible for the FHA loan.

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