loan approval for investment real estateThat’s really an interesting title, isn’t it? After all, real estate investors need to know how to get their financing approved, not turned down, right?

There is a trove of information both online and in print about how to obtain an approval for an investment property, but there are some things that can slow down or even halt an approval. Knowing what they are will help you avoid a turndown.

Career Changes

One thing that will force your loan application to a screeching halt is changing careers. You can certainly change employers if you get a better offer but switching industries will cause a mortgage lender to reconsider your loan application. Changing companies is okay, going from a plumber to a dentist is not.

Cosign for Someone Else

Helping out your nephew to buy a new car, while certainly a good thing, can also affect your ability to obtain financing for that next duplex. When you cosign for a loan, any loan, a lender will act as if that new car payment for your nephew is actually yours. If the car payment is $500 per month, a mortgage lender won’t divide that amount in half but assign the complete debt to you. Should your debt to income ratios be on the high side, sometimes even the slightest increase in debt can decline a loan application.

Buy Something on Credit

And speaking of new cars, don’t take on any new debt while your mortgage application is in process. Even if you can easily afford a new car payment, your mortgage lender will want to see the documentation of your new monthly payment and loan balances. In fact, even if you apply for a car loan and decide against it, you still have a new credit inquiry on your credit report. You’ll be asked to explain who looked into your credit report and why.

Start a New Business

Unless you’ve been a real estate investor for several years and can back up your income with two years’ worth of federal income tax returns, don’t quit your job and start a new business. Mortgage lenders ask for at least two years’ experience running a profitable business, again verified by tax returns.

In short, once you apply to finance an investment property, keep everything at a standstill until your loan has closed. Want that new car? That new boat? Wait until after you close.