Description: Know what measures you should take prior to investing your money in real estate sector.

Walking down the real estate investment path

When you’re thinking about investing in real estate, not only would you require a huge amount of money but also a good credit score. Hence, it’s essential that you try to repair credit before making any real estate investments. It’s often necessary to take out a loan to make real estate investments. It’s almost impossible to qualify for a loan if you don’t have adequate credit. Hence, the necessity to repair credit plays an important role over here.

Before investing in real estate, you must take some instant measures given below:

1) Understand the difference between your credit score and credit report

A credit report is usually offered by one of the three principal credit reporting agencies. It enumerates the different accounts that you presently have or previously had. This report also documents how sincere you have been in making your loan payments.

In contrast, a credit score is a figure that is formulated by the Fair Isaac Corporation. It is also termed as a FICO score and this number is worked out for every one of your credit reports. Your credit score reflects your repayment capacity. The lenders use your income, credit score and your existing debt obligations (the amount that you spend towards your debts each month) to decide the amount of the loan they are ready to lend you.

Your FICO score is used by banks to assess the possibility of non-payment, which enables them to work out your interest rate. The more is your FICO score, the less is your risk and hence the less is the return the bank is ready to receive on your loan. Therefore, a higher FICO score converts into a reduced interest rate for a particular type of loan.

If your credit score is below 700, take appropriate measures to take it at that level.

2) Get a lender      

Always look for correspondent or direct lenders. They offer loans with the most attractive rates and minimum closing costs. Compare the quoted rates with the rates advertised by Bankrate.com to find out whether you’re obtaining a good deal.

You can talk to your family members or friends who are real estate owners and get the details about the lender they worked with (provided they are satisfied with the services). Talk to a reputed bank in your neighborhood about getting a loan. Find someone in the bank with whom you can always talk to. See whether the lender is a direct or correspondent lender. Having a good credit score would always help you find a good lender. Always be frank with your lender and check the documents that they send you. Talk to at least three lenders and question them about their rates.

3) Start building up a relationship with a real estate agent

Real estate business is a local business and real estate agents work as the eyes and ears of investors who are not making full-time investments. Hence, it’s essential that you build rapport with a real estate agent in a locality where you’re thinking about investing. Particularly, you need to build rapport with a buyer’s agent. Working with a buyer’s agent is a common trend nowadays and can help you get the best possible deal.    

4) Get a lawyer

You’d need to have a reputable real estate lawyer to manage the closing. Recommendations are helpful in this regard. Once more, you don’t really understand whether they are dependable till you perform a closing with them but certainly go to their office prior to choosing them.