Real Estate Financing Trends
What’s trending in the real estate financing space now?
Here’s what’s changing in the market as we roll through the second quarter, and into the second half of 2017…
Rising Loan Volumes
The Mortgage Bankers Association, analysts, and individual lenders are expecting loan volumes to rise this year. Commercial real estate loans are predicted to hit new highs in 2017 and 2018. That’s following RealtyTrac’s annual house flipping report which shows far more flippers are now using financing. Buy and hold real estate is still popular too, yet many rental property investors have most of their capital tied up in equity and will need to use leverage to expand their portfolios this year.
Higher LTV Financing
Lenders are expanding loan programs with new higher LTV options. In addition to 100% transactional funding, VA and USDA loans, private lenders and rehab lenders are also moving closer to offering 100% financing for fixing and flipping houses and small multifamily properties.
Declining Credit Score Requirements
Various efforts are being made to reduce credit scores used in underwriting. How much relief this provides to investors will depend on how front line mortgage originators adopt them. Many are still being far more stringent than the secondary market demands.
True Stated Income Loans
Alternative documentation loans have been on the fringes of the market for a while. Now we are finally seeing more lenders offer stated income loans for investors that don’t require tax returns, or even bank statements.
Equity Sharing Loans
Lenders are bullish on the market continuing to grow. More are wanting a piece of that rising equity, in addition to interest and origination fees.
JVs
Savvy investors and lenders are increasingly partnering up. This can be a great strategy for expanding, while minimizing risk, increasing diversification, and gaining access to more lucrative investments.
Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.
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