Common Investor and Mortgage Financing Programs

Typical Funding Options for Real Estate Investors

There are many ways you can finance and plan your next investment project. Copeland Group Realty and our associated service partners are familiar with the commercial and residential financing options, including partnerships, syndicates and other flexible options. We only work with the best local real estate providers who can help facilitate a smooth sale for your next Texas real estate investment.

Prime- Mortgages for borrowers with over a 620 fico score. Lower interest rates with higher LTV's and lower costs.

Sub-Prime- Mortgages for borrowers with a 619 and under fico score. These carry higher rates and higher costs.

ARM- The ARM is an adjustable-rate mortgage whose interest rate can go up or down. The adjustable period can be three months to ten years. Generally the increase is 1% to 5% depending on if it is a Prime or Sub-Prime arm. The ARM is ideal if a borrower plans to sell the home within a short period of time.

Hard Money- Hard money can be great for investors that are flipping or rehabbing. They are most often based on After Repair Value (ARV) instead of the loan value. The average ARV is 65% but there are programs for up to 80%. Hard money loans have higher rates and are due within 6 months to 2 years. The loan is often amortized over a 30-year period. Contact us for a list of hard-money lenders that serve our area.

Interest only. With an interest-only mortgage loan, you pay only the interest on the mortgage in monthly payments for a fixed term. After the end of that term, usually five to seven years, borrowers can refinance, pay the balance in a lump sum, or start paying off the principal, in which case the payments greatly increase.
Option ARM. Each month, the borrower can choose their payment. Paying minimum amount can free up funds for other uses while making larger payments build equity faster.

Negative Amortization. Some types of ARMs (for example, pay option ARM loans) offer payment caps rather than interest rate caps, which limit the amount the monthly payment can increase. If a loan has payment cap but has no periodic interest rate cap, then the loan may become negatively amortized when the interest rates rise to the point that the monthly mortgage payment does not cover the interest due. In that case, any unpaid interest will get added to the loan balance, so the loan balance increases. Borrowers still have the option to pay the minimum monthly payment, or the fully amortized amount due.

Seller Financing. One of the most valuable tools an agent or broker can use is seller financing. If terms are favorable, the investor can create greater leverage by taking advantage of this financing option.

Lease Options. Texas has guidelines on lease options that some states do not. Texas legislation requires investors to comply with a list of new restrictions on title, lease provisions and existing financing. We have board certified legal specialists who can help investors understand these relatively new rules.