Some instructions you should know about investment properties
Financing is the hardest part of buying income properties. However, it does not have to be. There are many ways to finance an investment property, each with its own advantages and scenarios.
First, you need to make a sizable down payment. Since mortgage insurance will not cover investment properties, you will need to put at least 20 per cent down to secure traditional financing.
Moreover, you need to think creatively and smarter. If you are looking for a good property with a high chance of profit, consider securing a down payment or renovation money through a home equity line of credit, from credits cards or even via some life insurance policies.
If your down payment is not quite as big as it should be, consider going to neighbourhood banks that have a little more flexibility for financing
Some ways to finance a rental property
The common way to finance a rental property is to use bank mortgage. Most of these loans come in the form of non-owner occupied loans, but other types are also used. A conventional bank loan will consist of a down payment, mortgage payment, interest and other considerations.
Another alternative way is to use small bank loans. Small banks in your local area do not adhere to the Fannie Mae guideline and Freddie Mac guidelines. Instead, their requirements are not difficult to obtain, which can make qualifying for a mortgage easier to do.
Moreover, you can borrow from the sellers themselves. As weird as it sounds, it is possible to obtain mortgages from real estate investors who want to sell their properties. Everything about the loan is negotiable.
Finally, an easier way is to use a private lender loan. A private lender may be anyone you desire like a friend or a fellow investor from your real estate investing network. Private lenders are a great source of financing for a rental property.
Investment property loans application process
The application process for obtaining an investment property loan is very similar. You can typically work with a loan officer to be pre-approved within 20 or 30 minutes. This pre-approval is good for anywhere between 30 and 90 days, depending on your lender. However, if you do not purchase a property in that period, then your lender may have to re-check your credit and approve you again. Once you have found an investment property you want to buy, you can submit all required documentation to get the final approval.