What is a real estate loan?
Real estate loans are a type of debt that is secured by your property. The loan is secured by the collateral, and you will be issued with the mortgage on your property. If you are unable to pay the loan when it comes due, you can default on the mortgage and be foreclosed upon.
While this sounds pretty grim, there are ways to avoid going into foreclosure with a real estate loan. If you are able to afford the monthly payments, you may have some room in which to work with your lender. Before you approach your lender with your plans to fix the situation, you need to get a feel for the process first.
First of all, be honest with yourself about your current financial situation. Asking yourself what your income should be monthly, will give you a good idea of how much your monthly payment should be. This is also the best time to ask yourself if you are adequately covering your monthly expenses.
If you are currently not sure where you stand financially, you will need to consult with your lender about your chances of qualifying for a real estate loan. If you can qualify, there is always the option of refinancing, but the lender will want to see your current situation before giving you the okay to refinance. This way, they can determine what type of deal would be best for you.
It is important to realize that refinancing may result in a potential savings on the monthly payment. This can be helpful if you are able to save a little money right now. Even if you have to take a hit on the monthly payment, the savings will be worth it.
Before you approach your lender?
Before you approach your lender with your plans for a real estate loan, be prepared. Find out what documentation is needed from your lender. Include proof of employment or personal income statements, as well as a profit and loss statement, if you own real estate. These forms will show how you are currently living your life and that you are a reliable part of the family.
Be honest with your lender about your current lifestyle. You do not want to be viewed as someone who lives in squalor or has a habit of neglecting their home or other property. A real estate loan, while being secured by your property, is not really a place where people go to live in abject poverty.
Another thing to consider when speaking with your lender is the condition of your property. Has the exterior of your home been adequately cleaned? You should be able to show a variety of pictures showing the condition of your home to ensure that the lender is going to approve your loan.
Is the property in good shape? This includes maintenance that you have done such as painting and landscaping. Again, this will come up during the approval process so be sure to take pictures of your property and put them on your resume.
When you are talking to your lender, you should also get the current property appraisal done. Ask your lender for any additional fees that you will be expected to pay, and ask how the appraisal is being done. This should allow you to provide all the information you need to the lender in order to get approved for a real estate loan.
Qualify for a loan?
Even if you qualify for a loan, you need to be careful. Many lenders will require that you make a down payment before approving your loan. The down payment amount is going to vary depending on the type of loan you are requesting, but it is going to be paid by you.
If you do not have the money, you will be held liable for the rest of the loan. This is why it is important to be honest with your lender and include all the necessary details. The information you provide is going to help determine your chances of getting approved for a real estate loan.