In real estate investing, the most common way among property investors for financing the purchase of an income property is through a traditional mortgage loan. In this case, a real estate investor borrows money from a bank. He/she then makes payments to the bank in order to pay off the loan.
Still, investment property financing is often based more on the collateral (the property) than you as a borrower. Remember, lenders know that investors are far more likely to default than homeowners, so they’ve already built some extra caution into the loan programs in the form of lower LTVs.
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Financing your first investment property can be a lot of work to take on and you don’t have to go it alone. It’s a good idea to hire an accountant who understands investment property tax strategies to help you.
Conventional financing often requires the borrower to afford the mortgage for both their primary residence and the new investment without the help of future rental income. If conventional financing is not possible, there are alternative types of loans which maybe more appropriate to help you finance an investment property. 2.
Investment Property Mortgage Rate With today’s low mortgage rates and many bargains available in the real estate market it may be an ideal time to invest in a rental property. Investment properties provide a vehicle that allows you to enjoy the potential for market appreciation while building equity each month.
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Unsecured personal loans and lines of credit can be an excellent way to do 100% financing for an investment property. The loan exchange offers personal loans up to $100,000. Depending on your purchase and rehab costs, you may be able to use unsecured loans to handle both the purchase and the rehab of the property.
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Even though the FHA loan is for owner occupied only, there are ways to use this for your benefit of investment properties. Say you buy one property to live in with an FHA loan, you can then refinance the loan after 1 to 2 years to get you out of the FHA loan. After that, you can then buy a second home with a new FHA loan and rent out the first.