During the height of the economic crisis, a lot of people were hesitant to invest in real estate as a result of the housing meltdown. Fortunately, this stage has passed and the industry seems to be making a comeback. Today, you can easily buy in a down market and make a huge profit. But of course, you need to do your research depending on the type of investment you’re planning to make.

A good rule of thumb to follow before investing in real estate is that you should have an excellent credit rating, and you should feel financially secure. This way, even if you unfortunately experience some downsides to your investment, it wouldn’t have that much of an effect in your life. The upside is that you’ll earn a significant profit; you’ll consider real estate investment as a lucrative main or side business venture.

Now, the one problem you’d have when dabbling in property investing is where you’ll get the funds you need. How are you supposed to finance your real estate investing venture? Here are the top five ways on how you can do just that:

1: The Traditional Way

You need to have a solid credit rating and be financially stable before trying to invest in properties. The traditional way to finance real estate investments is to borrow money from banks, credit unions, home mortgage companies, and other financial institutions. Most of these have a high credit score requirement. You also need to provide a full documentation of your income and debts, and you need to shell out at least a 10% down payment. Overall, this is one of the safest and most well-known methods of financing real estate investments.

2. The Lease Option

An unfamiliar yet still suitable form of financing investment properties is the lease option. It allows you to own property for little or even no down payment. Within two or three years, you can be given the right to purchase the property while you’re still looking for financial backing. It can also be arranged that a percentage of the monthly lease payment goes towards the balance of the cost of the property.

3. Through Seller Carry Back

Also called buying on terms or creative financing, seller carry back refers to any method of financing aside from the traditional one. This is a good way for investors to use as little of their own money as possible, where sellers usually agree to carry the note of your purchase.

4. The Seller Second

For this, the seller provides a second mortgage and cash flow notes are usually involved. For example, if you’re pre-qualified for a loan which requires you to shell out 20% down payment, an offer can be made so that the seller can carry a cash flow note for 20%. The one thing you need to check when going for this option is that the loan you’re qualified for should allow a second mortgage attachment. Although there are some loans where this is a possibility, seller seconds are not allowed in most cases.

5. Using the Subject-To Method

Finally, you can go for the subject-to method which is a short-term solution for real estate financing. It means that the investment is subject to existing financing. When you purchase a property, one condition is that the existing financing stays in place. The title can be transferred but the loan will still be under the seller’s name, although the buyer is already making the payments. This financing is suitable for properties that are about to be foreclosed.

Before making any business decision, do a thorough research on the advantages and disadvantages of these options. Finding the right method of financing investment properties is key to your success, so make sure that it fits the type of program that you’re planning to invest in. For more information, visit Real Estate Investing Guru Review.

Copyright © Sherry Ann Smith

A foreclosure terminates all rights of the homeowner covered by a mortgage. During the foreclosure process, the estate becomes absolute property of the lending institution that holds the mortgage. More and more borrowers are defaulting on their mortgages each month, causing an increased risk of foreclosure. The real estate boom in that happened between 2002-2006 allowed many unqualified borrowers to take out excessive mortgages at inflated prices. Millions of homeowners are now living with mortgages they can no longer afford and they fall behind on payments.

Some of these homeowners are able to work their way out of foreclosure by catching up on payments and curing the loan. However, more than half a million homes went through foreclosure in 2010, and more homeowners are threatened with the practice due to late payments and defaults.

What is the procedure for a foreclosure?

The foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to unemployment, divorce, medical leave, terms of the loan, poor property management, and even death.

Foreclosure does not begin after a single payment is missed, but missing a payment can affect your credit score. There is no single answer as to how many missed payments a borrower can have before foreclosure begins. It all depends on the action the creditor decides to take. Some may only miss a few payments, whiles others may fall behind for many months. Lenders do not want to foreclose on properties as it is a risky and expensive process. They will often seek a compromise and exhaust all avenues to help solve the problem, with foreclosure being a last resort.

Once the bank does decide to proceed with a foreclosure on your property, they will send a formal demand for payment in the form of a letter. This letter of notice is referred to as a Notice of Default (NOD). This is typically issued after 3 months of missed mortgage payments. Keep in mind that the notice is a threat to sell your property, terminate all your rights in that property and evict you from the premises.

How do I stop foreclosure?

One of the best things you can do to prevent foreclosure is work with your bank. Do not ignore the issue as it will only get worse. If you have trouble paying your mortgage, you have several options including forbearance, short sale, loan modification, refinancing, and a repayment plan. Talk with your lender about these options.

In addition, there is a multitude of real estate investors looking to purchase homes from sellers who are in financial duress. Talk with a local real estate agent or private lender to find an investor in your area. Real estate professionals and hard money lenders work with investors all of the time and most are in the market of purchasing short sale properties. Short selling your home is far more advantageous than foreclosing.

Written by Kellie Davis of Capital Fund I Private Lending. I invite you to learn more about your foreclosure options at http://www.capitalfund1.com.