Time to Benefit from Sub-Prime Loans
Mortgage lending has tightened in recent weeks. Many of us who were qualified for a real estate investment loan discovered that, much to our dismay, we no longer qualified for the loan that made sense for us to invest in certain kinds of real estate transactions.
In fact, to be more precise, the loan we wanted was no longer available. Period! Thankfully the real estate lending picture is looking much brighter. Programs that were not available one or two weeks ago are available again - and more are coming on line at an encouraging pace.
The reason for the quick turn around in lending philosophy is very simple. The lenders discovered their knee jerk reaction to foreclosures in the sub-prime market did not correctly reflect the paying habits of Alt A type borrowers (most of us who have great credit and plenty of income but choose to apply for a loan using stated income).
The sub-prime loan market is a different breed of loan and lending target audience. The rates and fees are higher for sub-prime loans because the applicants are a greater risk. They either do not make enough money to qualify in the normal way or they do not pay their bills in a timely fashion, or both.
Lenders make an educated guess about the reliability of these borrowers. Sometimes they the get it right, sometimes they do not. But the point is sub-prime borrowers are not a great risk.
The positive side to the mortgage "meltdown," as I saw it called, is that it has created a wonderful climate for real estate investing. Now is the time to educated yourself and jump in. In the next 60 to 90 days millions of dollars will be made for real estate investors.
The herd mentality will result in freighted home owners willing pay for you to take their property with your terms. Is there risk in investing? Yes. But if you can buy or control property without using your hard earned cash, you have very little risk.
The choice is yours. You can be a sheep and follow the heard or you can take the bull by the horns and reap tremendous profits virtually risk free. The only question is will you be ready to reap the rewards of bad press coverage and scare tactics?
Steve Chapman, a columnist and editorial writer for the Chicago Tribune, has some thought provoking comments about the subprime real estate loan market. It's worth a look. You can read it at:
Now, go make it a great real estate investing day. It's your choice.
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© 2007 by Don Loyd
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