Skip to main content

How do Investment property Mortgages work?





How do Investment property Mortgages work?

Annette Bui |Updated May 29, 2020 | Mortgage Programs 101

Investment properties are a great way to leverage assets to create wealth, whether it is a property purchased with existing tenants that occupy the whole house or a multi-family unit with multiple tenants. The intention is to acquire income producing property so essentially another party is paying the mortgage for you for either a short term or possibly long-term investment. When qualifying for this type of loan, depending on whether there is an existing tenant or not. The income may be used to offset your mortgage and other expenses. Unlike primary and secondary homes, an investment property does not have restrictions such as a minimum distance from your primary residence and does not have to be near a resort. In some cases, such properties do not get mortgaged to generate rental income but rather upgraded or remodeled and later sold for a profit by real estate flipping.

 

Advice for acquiring an investment home:

 

Acquiring investment property requires due diligence to know the local market and understand how likely the value is going to appreciate or retain its value. A vital part of identifying a good investment is researching what its operating costs and projected rental income the property can generate. Some real estate professionals recommend at least 1% of the purchase price as the minimum threshold on rental income to be considered. Furthermore, to account for any additional maintenance or management costs if you rent out to tenants or cost of materials and labor to get upgraded and flipped.

It is essential to do the research and get informed so an educated decision can be made for the nominal price. Before making the decision, you may want to hire a building inspector to locate any additional issues that may arise if there are plumbing, electrical problems to avoid any mishaps as  well as continuing this on a frequent basis.

Keep in mind, investment properties require a higher down payment of a minimum 20-25% depending on your credit score in addition to extra cash reserves of up to two months expenses for each property owned. Thus, if you own just your primary and the new investment then you would need to show two months of expenses on your primary home and an additional two months for the new property.

 

How to get started?

To get started on your investment home search, we advise reaching out to Annette’s team to get a personalized pre-approval to help you shop with confidence. After you close, we recommendations to conduct ongoing financial assessments to ensure your finances are in order and well managed to meet your lifestyle needs. With Annette’s team, you will continue to get the support and guidance how to manage your financial journey. The value system Annette employs is to endorse a perpetual program and relationship to continue a long-term relationship. To be readily available if your financial goals change as your family grows and adjust a road map accordingly to meet your custom-tailored needs.

 


Comments

Popular posts from this blog

10 Legit Online Gigs to Make Cash in 2020

5 Legit Virtual Jobs to Make Cash in 2020   Annette Bui| Updated July 7, 2020 | Make Money   Are you over living paycheck to paycheck and always worrying about money? Grab my FREE Budget Cheat Sheet and take control of your budget today! More and extra of us are searching for respectable online jobs that we can work remotely. It can be challenging to discover workplace jobs when you have children or other commitments and discovering an online job can provide you so much greater freedom and flexibility to earn extra money.   Affiliate Marketing Affiliate advertising is where you can earn a commission from merchandise and offerings that you recommend to your readers.   Products or Services You can create your personal merchandise or offerings and promote them thru your website, and many recommend that the fine way to make money from your blog is to do this.   Blogging You’re currently studying online blogs that earn top bloggers over $5,...

Little Known Difference between Interest Rate and APR

        Little Known Difference between Interest Rate and APR       Annette Bui| Updated March 21, 2019 |  Mortgage Programs 101        On e of the first things consumers want to know is what is the interest rate? When comparing lenders and finding out which loan product works best for you. One of the most important factors is to look at what the Interest rate as well as the APR or annual percentage rate.  While both figures will express how much you are paying on the loan, they do not mean the same thing.  The interest rate is the cost for the principal amount borrowed on your mortgage loan. This can be either fixed for 15, 20 or 30 year term.                   The APR, short for annual percentage rate tells you the total cost of financing your loan including any fees, discount costs that are financed into the loan. This means, when you see an advertis...

Simple ways to determine if it is WORTH it to refinance!

Simple ways to determine if it is WORTH it to refinance!   Annette Bui | Updated March 21, 2019 | Lifestyle   Why would people consider refinancing? Will your interest rate be the very first reason? I genuinely believe you 'd like to be able to save at least half a percent or at least $150 a month if you want to refinance. The reality is that when you refinance, the costs could range from 2-4 per cent anywhere, so you really want to make sure that the savings have a substantial benefit. Consider the Payoff benefit. Will you be there for 5- years? Or maybe even extended refinancing?  If you are going to be there for a very long time, then it will make sense because you will get a substantial amount of money over the duration of your loan that is equivalent to thousands of dollars. Do you know the substantial net savings benefit? Yeah, when you do a refinancing threes two forms of costs incurred, reoccurring expenses are like your taxes and premiums and fees, so you...