Investing in Real Estate
Buying an Investment Property Might be Your Ticket to a Secure Future
Buying an investment property can have plenty of advantages, even for people who do not consider themselves real estate moguls. Mortgage interest is a wonderful tax deduction for those who can use any help they can get in that department. As an owner of an investment property, you not only have the benefit of the interest write off, but also the increase in property value. It is common to gain tens of thousands of dollars in equity and value over an extended amount of time.
Some people have the misconception that purchasing an investment home is something that will require much time, money and energy. The first thing to consider will be down payment. The best way to purchase any property is to put 20 percent down. This usually guarantees you the best mortgage rates and terms. However, ten percent is a wide spread average for many investment properties. As always, it is a good idea to speak with your lender about your financial profile to consider different options with the size of down payment you have available.
Investment Properties have Proven Historically Stable and Profitable
Many people invest in stocks and bonds. Investors in the Stock Market tend to have ups and downs with the worth of their holdings and the return on the original investment. Real estate has historically proven itself to be one of the most stable of all conduits for investment. As the economy can hit peaks and valleys, so does the housing market. However, over an extended amount of time, the value of property tends to be much more stable and to move in the upward direction. Owners of investment real estate are most likely happy with the decision to own it in the long term.
The Lending Process for an Investment Property Differs Little from that of a Primary Home
There are several ways to obtain financing for an investment property. You will be requested to provide the exact same documentation that you did when you purchased your primary residence. Income, assets and credit worthiness are still the primary components in the lending process. You should know that you may be required to document more assets than in the financing of a primary home. A lender likes to see some liquid assets, typically six months of mortgage payments work just fine.
Managing an Investment Property Doesn’t need to Break your Wallet
When looking into making an investment property purchase, survey your options. Inquire with your lender what options to financing that there might be. Many investment property owners try to keep the monthly payments at a minimum. There are several different loan types, for instance interest first. An interest first loan would allow the initial ten years of payments to be reduced to interest only and allow the borrower to make up the principle throughout the remaining 20 years.
Maximize your potential by exploring options with your lender. If you explain your goals to a professional lender, they will be able to walk you through the process to achieve what is best for you!