Rental & Investment Property Information

Things Every Homeowner Should Know Before Investing in a Fixer-Upper

2012-05-19T06:22:00.000-07:00

The current housing market presents some unique opportunities for those interested in purchasing investment property. With low home prices, low interest rates and a large inventory of depressed property on the market, even small-time investors can come out ahead by snagging a fixer-upper.

With that being said, there are a few things you should know before plunging into a fixer-upper deal. While the thought of purchasing a dilapidated home and turning it into a valuable asset may seem like an attractive idea, it will take a lot of time and money to make this dream a reality.

The money aspect can be challenging, as lending standards have become much stricter when it comes to borrowing against equity. Homeowners used to be able to tap into their equity fairly easily if they needed to come up with the cash for a down payment or repairs. These days, it's a little trickier. In order to borrow against your current mortgage, you will likely need to have significant equity in it, and that's after taking any losses in value into account within the past several years.

Keep in mind that if you do decide to take out a second mortgage, you will need money for not just the down payment, but also enough money to cover repairs or remodeling. Additionally, you will need enough money to float you through the first several months of mortgage payments, to give you time to fix up and rent out the property. That's where the time aspect comes in. Depending on the state of the property, it could take several months or even a year or more before it's able to produce any cash-flow.

When it comes to financing a real estate investment, some people go the second mortgage route, but others may prefer alternative means of financing. Borrowing against your home to pay for your fixer-upper can be a risky choice. If the investment falls through, you could risk losing your home.

It's a good idea to speak with a mortgage professional about all the possible financing options. Most lenders offer loan programs for investment property and can advise on which ones would work best in your scenario.

Other Related Posts and Resources:
Return on Home Improvement Projects
Home Improvement Loans
Maintaining Rental Properties Long Distance
How to Value Investment Properties

Investment Property Calculator - Rate of Return Calculator

2011-10-27T06:55:00.000-07:00

Looking for a tool that can help you quickly and easily give you a snapshot of numbers relating to an investment property? KJE Computer Solutions put together a cool calculator for people interested in rental properties. Simply enter information on your property such as your loan amount, interest rate, amortization period - the value or your land, personal property, and building - your estimated annual rent, projected vacancy rate and depreciation rate - and a breakdown of your annual expenses, and click "View Report". The result will be a detailed summary of the featured property including estimated cash-flow and projected rates of return. Pretty cool stuff.

Mortgage Rate Recap - Rates Inch Higher This Past Week

2011-10-17T06:14:00.000-07:00

Home mortgage rate averages moved higher this past week following several weeks of record setting lows according to Freddie Mac's most recent mortgage rate survey. The report noted that the rise in mortgage rates was in part a result of better than expected news on the employment front as the economy added 103,000 new jobs in September. While the addition of 99,000 new jobs added to payroll beat expectations, the numbers were not great enough to move the unemployment rate from 9.1%.

The 30 year fixed rate mortgage average moved to 4.12% (.8 pt). This was an .18% increase from the previous week. The 15 year fixed rate average jumped from 3.26% to 3.37% (.8 pt) and the 5/1 treasury indexed ARM average rose from 2.96% to 3.06% (.6 pt).

While rates did rise over the past week, it's important to remember that this increase comes at the heels of several weeks to record low mortgage rate levels. Interest rates are still extremely low and there are plenty of great refinancing and hope buying opportunities out there for those who qualify. You can research current mortgage rates online on web sites such as ForTheBestRate.com. Bankrate.com, BurlingtonMortgage.biz, and Erate.com.

Below is a snapshot of today's interest rates from BurlingtonMortgage.biz (Alabama refinance rates used in the sample). Please note that rates are subject to change without notice and that the rates published are for primary residences. Rental property mortgage rates are typically higher. Please visit the publisher's web site to review the criteria used in the survey:

30 yr fixed mortgage rates:
Amerisave - 4.375% Note Rate - 0 pts - $1995 Fees in APR - 4.460% APR
Quicken Loans - 4.500% Note Rates - 0 pts - $1553 Fees in APR - 4.457% APR

20 yr fixed mortgage rates:
CloseYourOwnLoan.com - 3.750% Note Rate - 1 pts - $1345 Fees in APR - 3.943% APR
Quicken Loans - 4.125% Note Rates - .875 pts - $1553 Fees in APR - 4.318% APR

15 yr fixed mortgage rates:
Amerisave - 3.375% Note Rate - 0 pts - $1995 Fees in APR - 3.521% APR
Quicken Loans - 3.875% Note Rates - 0 pts - $1803 Fees in APR - 4.009% APR

10 yr fixed mortgage rates:
CloseYourOwnLoan.com - 3.500% Note Rate - 0 pts - $1345 Fees in APR - 3.643% APR
Quicken Loans - 3.875% Note Rates - 0 pts - $1803 Fees in APR - 4.068% APR

7 Year ARM rates:
CloseYourOwnLoan.com - 2.750% Note Rate - 1.875 pts - $1345 Fees in APR - 2.950% APR

5 Year ARM rates:
AIG Bank - 3.500% Note Rate - 0 pts - $1200 Fees in APR - 3.549% APR
Quicken Loans - 3.500% Note Rate - 0 pts - $2803 Fees in APR - 3.614% APR

Cash-Out Refinancing for Investment Properties

2011-08-08T07:05:00.000-07:00

There has been some news recently that more real estate markets are gaining momentum and prices are started to stabilize and even rise. Here in Wilmington, North Carolina, the Wilmington Regional Association of Realtors reported price increases in five area zip codes last month. For real estate investors, there has been plenty of reasons to sit on the sidelines in recent years as prices continued to sink. Now that there is at least some positive news in certain areas of the country, it might be time to get your ducks in a row and prepare to capitalize on today's lower real estate prices and increased demand for rentals in many communities. Underwriting guidelines may have changed since you last looked at financing investment properties (see Fannie Mae and Freddie Mac guidelines for investment properties). If you are planning on doing a cash out refinance on an existing rental to help pay for the down payment on another property, you may want to check out Fannie Mae and Freddie Mac's cash out refinancing criteria on investment properties.

Fannie Mae - At the time this post was written, Fannie showed the following LTV (loan-to-value) and minimum credit requirements in their eligibility matrix for cash-out guidelines on rental properties.
1 Unit - 75% Max LTV & CLTV - 700 min credit score
2 Units - 70% Max LTV & CLTV - 680 min credit score
3-4 Units - 70% Max LTV & CLTV - 680 min credit score

Freddie Mac - At the time this post was written, Freddie showed the following LTV (loan-to-value) requirements in their eligibility matrix for cash-out guidelines on investment properties.
1 Unit - 75% LTV w/o 2nd Mortgage, 70% LTV w/ 2nd Mortgage, 75% TLTV w/ 2nd Mortgage
2-4 Unit - 70% LTV w/o 2nd Mortgage, 65% LTV w/ 2nd Mortgage, 70% TLTV w/ 2nd Mortgage

There can be lots of variables, terms, and conditions with cash-out investment property financing. Be sure to speak with a licensed mortgage professional to review all the ins-and-outs of these products. Companies such as American Bank Mortgage, CapWest, Amerisave, Quicken Loans, and American Financial Resources offer cash out refinance mortgage programs as do many local, regional, and national mortgage companies.

Housing Affordability Rises to 20 Year Highs in Certain Markets

2011-06-10T08:57:00.000-07:00

According to a report released by the National Association of Home Builders/Wells Fargo Housing Opportunity Index, national housing affordability is at its highest level in more than twenty years. 74.6% of existing homes sold in the first quarter of this year were considered "affordable" based upon a national median income of $64,400. The report noted that this was the ninth quarter in a row that the index exceeded 70%.

Markets such as Kokomo, Indiana, reported 98.6% of homes sold were considered affordable based upon a median income of $61,400. Other areas such as Monroe, Michigan, Cumberland, Maryland, and Toledo, Ohio also scored high marks. Conversely, other small communities such as San Louis Obispo and Santa Cruz,CA, Laredo, TX, Ocean City, MD, and Santa Barbara, CA scored on the lower end of the affordability spectrum. You can review a list of market details on the NAHB web site.

With mortgage rates near or below 2011 lows, now may be a good time to look into purchasing real estate. There are plenty of great programs in the market for first time home buyers such as FHA and USDA loans. Below is a list of resources available from American Bank which highlight products available in today's marketplace:

3/1 ARM Mortgages - 30 year mortgage with a low introductory rate which lasts the first 36 months of a loan. After introductory period comes to an end, the rate adjusts up or down based upon a loan's margin and caps and the current rate of the index which the loan is tied to.
5/1 ARM Mortgages - Same idea as with a 3/1 ARM but the intro rate is in place for the first 60 month of the mortgage.
7/1 ARM Mortgages - See above...just with 84 month introductory rate.
30 year FHA Mortgage - Low money down fixed rate mortgage programs amortized over 30 years.
15 year FHA Mortgage - Low money down fixed rate mortgage programs amortized over 15 years.
5 Year FHA ARM - Similar in many ways to conventional conforming 5/1 ARMs but with potential for lower down payment.
Conventional 30, 20, 15, and 10 Year Fixed Rate Mortgages

For additional information on home financing, visit AmericanFSBMortgage.com or spend some time of mortgage rate research web sites such as ForTheBestRate.com, Bankrate.com, or YahooFinance.com.

Mortgage Rates - Dropping Like It's Hot

2011-06-07T11:17:00.000-07:00

Home > Financing > Mortgage Rates Fall Yet Again

If you have not already refinanced your primary residence or rental properties, you may need to get crackin'. Fixed mortgage rates fell for a seventh consecutive week hitting new lows for the year. According to Freddie Mac's most recent rate survey (released last Thursday), 30 year fixed rate averages fell from 4.60% to 4.55% with .6 points. 15 year fixed rate averages also drifted lower moving from 3.78% to 3.74% with .7 points. The agency reported 5/1 ARM rates remained flat at 3.41% with .6 points while 1/1 AR rates actually moved climbing slightly from 3.11% to 3.13% with .6 points.

Frank Nothaft, of Freddie Mac, relayed that fixed mortgage rates moved lower with US Treasury Yields as news came out the the economy is in a rut with consumer spending down a half a percent and the S&P/Case-Shiller® National Home Price Index dropping 5.1% between the first quarters of 2010 and 2011.

To read the full Freddie Mac release visit:
http://freddiemac.mediaroom.com/index.php?s=12329&item=40496

For additional information on current mortgage rates visit BurlingtonMortgage.biz, Eloan.com, or Bankrate.com. Keep in mind that all of those publishers are not displaying rates for investment properties. If you would like to request current investment property mortgage rates check out American Bank Mortgage by calling 877-215-2290.

Can you finance an investment property with an FHA loan?

2011-05-17T09:39:00.000-07:00

One requirement of an FHA loan is that it must be owner-occupied. This means in most cases investment properties are ineligible for FHA financing. There is a way to take advantage of an FHA loan in an income producing property however - by buying a multi unit home.

FHA loans are available for properties with one to four units. You can live in one of the units and rent out the others to help offset the mortgage costs. With an FHA thirty year fixed rate home loan your monthly mortgage payment will remain the same throughout the loan term (though escrow payments for taxes and insurance can increase over time) rental prices in your area will likely rise over the years.

The maximum eligible loan amount is higher for properties with additional units. This widget from American Financial Resources, an FHA lender, shows how the loan limits vary by number of units in three North Carolina counties. Find the FHA loan limit for a multi-unit property in your county here: http://www.afrmortgage.com/2d-afr-widgets.php

FHA Mortgages @ AFR

Mortgage Rate Update - Lowest Since Dec 2010

2011-05-06T07:01:00.000-07:00

If you have been holding off on refinancing your rental property, now may be the time to pull the trigger. According to Freddie Mac's mortgage rate survey from last week, mortgage rates hit their lowest mark since December 9, 2010. 30 year fixed rates fell to an average of 4.71% (.7 pts) which was down 0.07% from the previous week and down from the 5.00% average from the same period in 2010. 15 year fixed rates also dropped going from 3.97% to 3.89% (.7pts).

Adjustable rate mortgage products also moved lower with 5 year ARM rates falling .08% to 3.47% (.6 pts). Freddie Mac also reported 1 yr ARM rates remained fairly flat improving 0.01% to an average of 3.14% (.5 pts).

On Bankrate.com today, Seckel Capital was offering a 30 year fixed APR in Dallas, TX of 4.501% (4.500% note rate) on a 30 year fixed rate mortgage with only $12 in fees included in the APR calculation. The same company was also posting the lowest APR on 15 year fixed rates in the Dallas market at 3.751% APR.

It's important to note that all of the numbers used in Freddie Mac's survey and on Bankrate.com are for single family primary residences (as they are on most publishers' sites such as HSH.com, Shoprate.com, CompareInterestRates, BurlingtonMortgage.biz, etc). Investment property mortgage rates will almost surely be .25% to .75% higher (at least) after lenders' adjustments (see table on BurlingtonMortgage.biz). Even after the adjustments, rates this low are worth exploring.

Fannie Mae and Freddie Mac Guidelines for Investment Properties

2011-03-29T08:21:00.000-07:00

While there is some indication on both sides of the political isle that the United States government may elect to wind down Fannie Mae and Freddie Mac's role in the residential housing markets, borrowers are still likely to have to follow their guidelines for the near future. The vast majority of mortgage lenders and brokers in the country work with lending institutions which adhere to Fannie's and Freddie's lending criteria. These institutions often refine their own guidelines to make them more conservative

Below is a list of some resources that may help real estate investors learn about the programs available to them through lenders who sell their loans to Fannie Mae and Freddie Mac. Keep in mind that each lender may tweak their qualifying criteria so be sure to ask a mortgage professional for additional information on their product guidelines.

Freddie Mac's guide to investment property financing - Defines eligible types of properties and mortgage products which are and are not available. Explains where to find LTV (loan-to-value) requirements and spells out some of their underwriting guidelines.

Fannie Mae investment property financing guideline updates - In February of 2009, Fannie Mae updated some of their eligibility criteria including loan-to-value ratios and underwriting and delivery requirements in the following pdf.

Mortgage rates for investment properties are typically higher than that of primary residences and second homes. Both Fannie and Freddie have adjustments in their matrices which your mortgage lender should be able to explain to you. How big of an impact these adjustments may have on your principal and interest payments may depend upon a number of variables including your loan amount and the coupon spread between various rates for the programs that you are considering. For instance, the coupon spread may not be large enough with an adjustable rate mortgage to have an ARM make much sense. Pricing and spreads for 30 year home loans, 15 year mortgage loans, and other products will vary by investor. The only real way that we know to get accurate quotes is by speaking with mortgage professionals as most online rate tables do not take into consideration adjustments for rental properties.

Current Mortgage Rates for Real Estate Investments

2011-03-14T08:09:00.000-07:00

Mortgage rates for investment properties are generally 0.25% - 0.5% higher than those for conventional home financing. Given the current mortgage rates posted today (March 14th, 2011) we can assume that investment property loan rates are somewhere in the high 4% - low 5% range for a thirty year fixed rate loan. Investors can likely find an even lower rate by going with a loan program that typically offers pricing below 30 year fixed rates such as a 7 year ARM. 15 yr interest rates are also almost often lower than those of a loan with a 30 year term.

However you look at it investment property financing is available at extremely low rates right now. This is great news for real estate investors, and is causing many to think about purchasing an investment property for the first time. If you're among this second group take a look though this site - you'll find lots of information to help you decide whether investing in real estate is right for you. If you have any questions please post them in the comments - we'd be happy to answer them in a future post!

Should I Consider a 5/1 ARM for a Rental Property? Ask a Mortgage Professional Series

2011-02-14T11:06:00.000-08:00

Some real estate investors are not buy and hold owners but rather seek to capitalize on depressed prices in markets they believe will rebound. In such cases, it may not make a ton of sense to take out a long term fixed rate mortgage product such as a 30 year home loan or 20 year mortgage. We asked Brian Mitchell, a branch manager with Gateway Bank Mortgage, in Wilmington, North Carolina for his thoughts?

Q: Should I consider a 5 year ARM or a 7 Year ARM for an investment property?

A: It really depends. With most mortgage providers who are selling Fannie Mae and Freddie Mac agency products, there is a 1.5%-2% hit on a mortgage company's rate sheet for the home being a rental property. The issue becomes whether or not it makes sense to pay the points out of pocket to get the lower rate and how many months and/or years it will take in monthly savings to recoup that upfront investment. If the point costs you $2,000 but you end up saving $75 a month in principal and interest payments, it will take you close to 27 months to break even. So, if you are planning on holding the property for more than 27 months, you could likely come out ahead. Of course, you are also taking on more risk with a adjustable rate product. Be sure to try to put yourself in a position to refinance to a fixed rate loan when and if the need arises.

Thanks you Brian for your input. If you are looking to purchase or refinance a North Carolina mortgage or Virginia mortgage, be sure to give Brian a call at 910-796-7141.

Available Home Loans For Investment Properties

2011-01-19T12:41:00.000-08:00

The days of stated income, no money down, interest only investment property loans may be behind us (should they ever have existed, really?) but that doesn't mean you are limited to only one program when it come to rental property loan programs. Here are some of the options:

30 Year Mortgage
The most popular mortgage option a thirty year fixed rate loan spreads out the payments across a thirty year loan term.

20 Year Home Loan
If you can comfortably afford the payment on a 30 year loan you might want to look into a 20 year mortgage. By spreading the payments out over a 20 year term rather than 30 you will likely get a better interest rate, and you will eliminate ten years of interest payments. Run the numbers with an online mortgage calculator to see how significant the savings can be.

If there is room in the budget take the advantages of a shorter loan term even further by exploring fifteen and ten year mortgage programs.

What are FHA 203 (K) Loans and How Do They Work?

2010-12-28T13:19:00.000-08:00

It is not uncommon for home buyers to come across property which is no longer of good shape or is simply outdated. So, the question becomes "how can a person finance the needed repairs or modernization efforts on a property without having to deplete all of their liquid assets?" One answer may be a FHA 203 (K) rehab loan.

The HUD web site does a good job of explaining what sets the 203 (K) program apart:

"When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point the lender has a fully-insured mortgage loan."

Properties must be 1-4 units, have been completed over 365 days prior, meet local zoning codes (for units), and newly constructed units must be attached to the original structure. Coops are not acceptable. These loans are not typical construction loans so if you plan on demolishing the property, you will need to speak with a knowledgeable loan professional about what part of the existing foundation must remain. People also use these loans to build additional units onto their properties and, conversely, to scale back their multi-family homes into single family properties. Single unit condos may also be considered eligible if they are HUD approved condominium developments.

From my years in the mortgage industry, I learned that the vast majority of loan advisors have zero idea how these loan work (myself included). I would highly recommend seeking professional assistance from a licensed individual who has several of these loans under his or her belt. In other words, this is not the type of loan to be the guinea pig on.

I believe that American Financial Resources, who is a direct FHA mortgage lender, offers these loans. If not, they may be able to at least point you to someone who does. You can also search for FHA approved lenders on HUD's web site.

Can a VA Loan Be Used to Buy an Investment Property?

2010-12-09T11:16:00.000-08:00

A qualifying buyer can use a VA loan to purchase most multi-family homes. However, according to VALoanCenter.com, the home must be used as the borrowers primary residence and thusVA loans can not be used for non-owner occupied investment property financing. When a VA borrower is obtaining their loan they are asked to certify that they intend to live in the home. VALoanCenter.com states that the only exception to this requirement may be for an IRRL (aka an Interest Rate Reduction Refinancing Loan). With this type of a mortgage, the borrower must certify that they previously occupied the the home as his or her primary residence. This makes sense considering how often military personnel are required to relocate. For more information, contact a licensed mortgage lender or mortgage broker in your area.

Fannie Mae Cash-Out Limits for Investment Properties

2010-09-29T13:01:00.000-07:00

Back when I was in the mortgage industry we would get calls daily from individuals looking to cash-out some of the equity in their investment properties. Unless you are working with a local mortgage bank or credit union who is going to portfolio your loan, then you will likely to subjected to follow Fannie Mae's or Freddie Mac's underwriting guidelines. Plus, may lenders/investors may add their own heightened restrictions to further reduce their level of risk.

I just looked up Fannie Mae's current Loan-to-Value guidelines for cash-out refinances on investment properties and they are:

Limited Cash-Out - 1-4 Units:
70% Max LTV and 70% CLTV
Minimum Credit Score of 720 is required.

The following is directly from Fannie Mae's site
(ref: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0902.pdf)

Underwriting and Delivery Requirements

The borrower cannot have any history of bankruptcy or foreclosure within the past seven years.
The borrower cannot have any delinquencies (30-day or greater) within the past 12 months on any mortgage loans.
Rental income on the subject investment property must be fully documented according to the Selling Guide, Part X, 402.24: Rental Income. Rental income from other properties owned by the borrower must be supported by two years’ federal income tax returns. DU messages permitting reduced rental income documentation must be disregarded and full documentation must be obtained. The borrower must complete and sign Form 4506 Request for Copy of Tax Return or 4506-T
Request for Transcript of Tax Return granting the lender permission to request copies of federal income tax returns directly from the IRS. The lender must obtain the IRS copies of the returns or the transcript and validate the accuracy of the tax returns provided by the borrower prior to the loan closing.
The borrower must have reserves for the subject property and for other properties currently owned by the borrower (i.e., other financed second home and investment properties) in accordance with the following section - “Reserve Requirements for Second Homes, Investment Properties, and Multiple Financed Properties.”
Lenders must use Special Feature Code 150 when delivering mortgage loans secured by second home and investment properties that meet the five to ten financed property requirements.

Please be advised that each lender may have additional requirements and Fannie and Freddie can and do make changes to their guidelines. Be sure to ask your mortgage professional for details on their mortgage products.

Getting Your Ducks in a Row - Preparing for Homeownership

2010-07-22T14:37:00.000-07:00

Hello again everyone. Sorry that is has been a few weeks since my last post but things have been crazy at work. We are in the process of building out a mortgage web site for one of our mortgage clients, American Financial Resources. We have spent a large chunk of this week writing, rewriting, and organizing their "Mortgage Education Center" (I will post a link when it's complete). I think that they have some very useful information for home buyers - whether they are looking for an investment property loan or are seeking to buy a primary residence. For example, we just finished a rewrite for an article on 10 steps to prepare for homeownership. Much of the information is pretty basic, common sense sense stuff but it never hurts to have a little reinforcement and continuing education when it comes to real estate ownership (unless of course you have to sit and listen to a boring lecture for three days).

We also put together a Google Knol that focuses on investment property financing which you may want to check. It discusses why it is almost impossible to purchase a rental property with less than 20% down unless you find a bank who is willing to portfolio the loan and make an exception.

Talk to you again soon.
Nat

Searching for Low Mortgage Rates on BurlingtonMortgage.biz

2010-06-28T09:48:00.000-07:00

BurlingtonMortgage.biz - new site to search for current mortgage rates

I wanted to give a shameless plug for one of our other web sites, BurlingtonMortgage.biz. I used to own a mortgage company in Vermont called Burlington Mortgage. Later, my wife and I moved down to Wilmington, NC where I became the Marketing Directory for a national mortgage company. The move left me with a web site that ranked pretty well for a hand full of terms so I did not want to retire the site. I recently left my position at the bank and decided to flip the site over to one where you could search for some low mortgage rates in your area. Every day rates get updated by a company called Money Rates and are posted to the site. While the displayed rates are for primary residences, you could still get an idea of who is "in the game" and then contact them for rental property rates. Like with any online rate table, you need to do some independent research on the service levels on the various companies. The Better Business Bureau and the companies' licensing agencies are usually a good place to start. Check out the site and let me know what you think.

Thanks,
Nat

Fannie Mae Conforming Loan Limits - Investment Property Financing vs. Primary Residences

2010-05-24T13:27:00.000-07:00

Brian Mitchell - American Bank

Brian Mitchell
American Bank
Branch Mgr

If you are planning on buying a multi-family home and living in the property, you will likely finance the home as your primary residence. Many lenders and mortgage brokers will look at Fannie Mae's loan limits for your area to determine whether you qualify for a conventional conforming mortgage. You can view the current 2010 loan limits on Fannie Mae's web site - here.

If you are not planning on living in the home, you may have to seek an investment property mortgage which typically means you are looking at a larger down payment and a higher interest rate. I spoke with Brian Mitchell, the Branch Manager for American Bank's Wilmington, NC call center, and he explained that lenders consider investment properties as a higher risk as default rates are significantly greater for rental properties. Mitchell added, "we still get calls every day from people looking for 100% investment property loans. Those days are long gone. Investors are wisely building in some protection for themselves."