Purchasing investment real estate for the first time can be a uniquely gratifying and frightening experience that combined with the current tough lending economy will deter many new property investors who would like to enter the market. It is absolutely imperative to remember that this situation we find ourselves neck deep in is not permanent. It too shall pass.

You will not find a better time to buy than now, it is a definite buyers market, but it will not remain. You need to understand how investment property loans work and get your own approval for one before you go out to buy the property you desire to own.

As you have probably heard, if you are paying any attention at all to the economic news, banks are in trouble and it is more difficult than ever before to get a home loan. It does, however, not mean that getting a loan is impossible. It means that your portion of the investment loan (that is your deposit) may need to be bigger than it was necessary a mere 2 to 3 years ago. You will find thousands of homes on the market, that have remained on sale for many months when you browse the local real estate listings. This is partly due to the banks showing more caution about whom they lend money to given the current economic climate has forced them to be vigilant.

Here is the bottom line; you need to keep your credit clean and score as high as possible. You don’t need perfect credit, but if you want a decent interest rate on your loan, then you are going to need to have something better than 650 for your credit score and if you want a great interest rate you will need a credit score of 750 or more. As you can see, you must make sure that your credit report is in good standing and free of problems. It is ill advised to close down old credit accounts that have a zero balance or cancelling credit cards that you are not currently using. Companies that give investment property loans will like at your long-term stuff as positives as long as you paid them or are paying them off.

You will want to have a down-payment for your property as well. 100% financing investment property loans are definitely still available but the interest rates tend to be higher and the homes have to be below current comparable market value. Another thing to remember is that you will still be expected to continue with mortgage insurance payments until 80% of your loan is left, which is another debt you do not wish to have.

Planning for your future is important and property is a great way to do that. You do however need to prepare for the understanding that investment property loans have changed from what they were just a two or four years ago and you need to be prepared to provide undeniable proof that you can pay the loan off on time every month for the entire term.

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