Our September partner spotlight is NFM Lending (NMLS 2893). We met with David Arocho, Sr. VP of Sales and Branch Manager (NMLS 525328) at NFM Lending to discuss investor financing vs. residential financing.
1. What is the difference between residential financing and investor financing?
· There is a difference in that owner occupied financing will have better terms. There is generally a higher down payment with investor financing equaling 20% or more. For 2-4 units, it is generally 25% down. More of a down payment = better terms
· If a Buyer is purchasing a duplex or multi-family with FHA financing and they are occupying one of the units, they can take advantage of the owner occupied rate.
· No prior rental history is required for investor financing – you can be a 1st time renter
· A rental survey will be issued to get a general idea of rent to comparable rates in the area
2. When does a property become commercial financing v. residential financing?
· Commercial financing or non-confirming financing is generally defined on 5 units and more or commercial buildings. Standard financing does not apply and there are different guidelines and requirements versus traditional residential financing.
· There can be an offset to the mortgage payment if a Buyer is purchasing an investment (2 unit) and both sides are rented and an active lease is in place, the lender could use up to 75% of the rental income to offset the monthly payment (other factors may apply).
3. What makes NFM Lending different from other lenders in regard to investment properties?
· NFM Lending has recently opened their books to obtain more investors, which has helped in getting better terms which in turn, more deals have been obtained.
To get more information about investor financing, reach out to David today! Email: darocho@nfmlending.com or Phone: 614-840-5013
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