I regret to inform you, Mr. Investor, that you have too many mortgages in your name. We are unable to grant your loan request at this time. This is something no real estate investor wants to hear, especially when a profitable transaction hangs in the balance. Another great reason to begin lining up sources of private money for real estate investing.
Maybe you havent reached the point of being turned down for having too many mortgages in your credit file, but invest in real estate for long and you may well face that situation. Either that, or some lender will tell you your debt-to-income ratio is too high.
Whats a debt-to-income ratio?
Great question. Debt to income ratio is normally calculated as follows add up your total monthly debt payments, including loans, credit cards, mortgages, etc.. Dont include things like utilities, groceries and the like just debts that appear on your credit report.
Now add up all your income each month from every provable source. Last, divide income by expenses and the result is your (DTI) debt-to-income ratio. Heres an example: if your income each month is ,500 and your debt each month is ,800, your debt-to-income ratio is roughly 33%. The lower the percentage, the better off you are from a lenders perspective.
Which is the main point of this article. If a loan payment isnt visible on your credit report, such as a private money for real estate investing loan, a lender wont include it in your debt-to-income calculation. Thus your borrowing capacity, and your credit rating, are not negatively impacted by private money loans.
In addition, you wont run into the maximum limit certain lending institution place on how many mortgages you can have.
This should make you very happy, because it means you will have more options when it comes to using your credit for other things, and more money available for investing. Greater flexibility equals more deals!
Thats one of the best things about private money for real estate investing. Everything gets easier, because the financing gets easier. Now you want to go out and get some of your own, dont you?
There are lots of great reasons to use
private money for real estate investing. For more
reasons to use private money for real estate investing try http://www.private-money-real-estate-investing.com.
