Lenders are in the business of lending people money because they make carefully calculated decisions based on your risk. They have two expectations:
To judge if you are capable of meeting these two criteria, lenders look closely at your current financial position and your historical financial situation.
When judging your financial past, lenders will look at:
When lenders are looking at your ability to make a profit, they’ll want to know about your total expenses related to the property.
How much will it cost you to take care of the property?
What will your insurance rates, taxes, and cost of repairs be?
The lender wants to see that you can cover your costs associated with home ownership, as well as their interest charges.
Lenders often want short repayment periods, while it usually more beneficial for the buyer to have longer periods.
Longer repayment periods mean that you can avoid origination fees, additional appraisal fees, and other costs.
When it comes to loans for investment property, a 20 year fixed rate loan is considered a long loan.
Keep in mind that most things in real estate are negotiable, and that your lender can be your partner.
Developing a positive long-term working relationship with your lender can only help you.