Tips for Obtaining an Investor's Mortgage
In most instances, purchasing a piece of real estate will involve
obtaining a mortgage. Only in very few instances is it possible to
purchase a real estate without using a mortgage. If you are purchasing a
piece of real estate that will not be your primary residence, then you
will be in need of an investor's mortgage. Unfortunately, obtaining an
investor's mortgage is not always easy. Lenders tend to be far more wary
when it comes to approving investor mortgages. As a result, there are
typically more rules involved in investor mortgages as well as higher
interest rates.
When applying for an investor's mortgage, you should know that in most
circumstances lenders will require a down payment that is much higher
than what you would expect to pay on a typical residential mortgage. The
reasoning behind this is that if you decide to default on the mortgage
you will personally be out more money, thus reducing the lender's risk
on the loan. On a regular personal mortgage, you would typically put
down between 0% and 10%. On an investor's mortgage, you should expect to
put down a minimum of 20%.
Also, while mortgage rates have decreased, when it comes to an
investor's mortgage, you should expect that you will pay more. The exact
amount that you will pay will depend upon the type of loan and the
length of loan. The rates could be as high as 20%; however.
Keep in mind that there are actually many different organizations and
associations that may be willing to assist you with financing for your
investor purchase. Even Fannie Mae has some programs that are pretty
well defined. With that said, you should keep in mind that in order to
obtain a loan through one of these programs, there will be generally be
a lot of requirements that will need to be met. The upside is that you
may be able to obtain a lower interest rate.
You may also be able to obtain financing through mortgage companies and
different banks. Keep in mind that each bank or lender will have their
own qualifications and rules that must be met. Most lender's websites
will provide information about requirements that must be met in order to
qualify for an investor's mortgage.
Another option for obtaining an investor's mortgage would be to use hard
money. This is often the easiest type of loan to obtain, but you should
know that it will also be the most expensive type as well. Such
mortgages are best used for individuals who intend to resell the
property fairly quickly. The interest rates can be extremely high, so it
is important to make sure that you hold the property for the least
amount of time possible. The advantage is that you may not have to
provide as much documentation as you would with other loan options. You
may very well have to provide a large down payment; however.
Keep in mind that obtaining an investor's mortgage can take some time.
This means that you must be prepared to exercise some patience
throughout the process. There are generally a number of hoops that must
be jumped through in order to obtain an investor's mortgage. The good
news is that the more requirements that must be met, the better deal you
may be able to obtain on your investor's mortgage.
Of course, regardless of the deal that you manage to obtain, keep in
mind that it is always crucial to make sure that you are working with a
reputable lender. There are certainly many lenders out there, but making
sure that you take the time to research the lenders you consider working
with can certainly put your mind at ease.
Also, make sure that you spend the time necessary to gather the
documentation that is needed to obtain an investor's mortgage. Even with
a hard money investor's mortgage, which typically requires the least
amount of documentation, you may find that you still need to submit
quite a bit of paperwork. Make sure you have all of the paperwork ready
to provide upfront in order to ensure that you have the best chances of
having your loan approved as well as avoid any possible delays
associated with your loan.
In the end, do try to make sure that you find the lowest rate possible
because even if you think that you may turn around the property quickly,
you may actually end up holding it longer than you intended.
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