Various options available for Investment Property Loans!
When we talk about investment properties, real estate investors can definitely relate with us. An investment property is simply a property that is purchased by a real estate investor with the intention to make profit on the property. Profit can be made through: rental annual income and resale of the property in the future. Investing in properties such as houses or land can be very profiting. It requires a lot of calculation and taking of risk as well as it also requires smartness and wisdom. You have to know how to estimate the future value of the property you are investing. Very essential!
Maybe you love to start this kind of business but you are low on funds, trust me, your problem can be easily solved. There is what we call “investment property loans”. As the name implies it is a form of loan (the process of borrowing from an entity with interest on return) for investment property. This article lays the most emphasis on investment property loans, how to go about them, where to get them and so on.
WHAT IS AN INVESTMENT PROPERTY LOAN?
Investment property loans are simply loans collected by a real estate investor for investment purpose. You can get an investment loan from the bank, insurance establishments or any other private lending entity. We have different types of investment property loans depending on the one that suits your condition. Most private lenders have basic requirements you must meet in order to qualify for their services. This also depends on the types of loans. You can be eligible for one type and ineligible for another. Most private lenders require that the money lent to the borrower should be return within the speculated time given to the borrower. Failure to comply can lead to serious consequences such as foreclosure or repossession of the entire property.
AVAILABLE LOAN OPTIONS FOR YOU
Before indulging in investment property loans, you have to understand in full the loan options you have so as to know which one would be suitable for your situation. We have different types of investment property loans. We have Normal Mortgage Loans, Hard Money Loans and Home Equity Loans.
Normal Mortgage Loans
Most home owners would know a thing or two about this kind of loan. It is like most common among its pairs. Very straightforward! It involves private lending entities like banks or mortgage brokers lending money to real estate investors for the purpose of real estate investment.
It is not as simple as it sounds, you have to be eligible based on a few requirements before getting your loan approved. This could take months as you know that you are not the only one. 90% of private lenders would check your credit history and scores before they can approve it. The minimum should be 620 for normal mortgage loans. This kind of loan is not backed by the government.
A very important requirement is that you must make a down payment of about 20% of the property’s purchase price. This is to ensure that you are capable to some extent to pay your debt.
In case you are in urgent need of a loan and the bank is delaying your approval, this could be a good option for you. This kind of loan can be gotten from private companies that deal specifically in offering loans to real estate investors solely for the purpose of investment. Unlike conventional mortgage loans from banks which could take months before approval, this is faster. The good thing is that they do not require your credit history, all they need is the value of the property you want to invest and decide on whether or not your loan would be approved. This is usually a short-term loan for a few months, but there are institutions that will provide bridging loans up to 36 months, depending on circumstances and your plans with the property.
Home Equity Loans
This is another useful and effective means of financing an investment property. Home equity is a kind of loan that permits an investor (home owner) to borrow up to 80% of your home equity value. Although this kind of loan has its merits and demerits, it is still one of the most utilized. Before approval the lender checks your assets, income and expenditure; your credit history, the value of your home and some other things necessary which would influence your approval. Caution is necessary as this usually means the fate of your home is linked to the fate of your investment property. This does not have to be an issue, but can be in certain cases. Make sure you talk to us to discuss all ins and outs.
Thus, home equity loan is a good and effective loan well-suited for responsible and hardworking real estate investors. You can gain enough to repay your debt in time.
GET A PROFESSIONAL FINANCIAL ADVISER
Indulging in investment property loans shouldn’t be something we should be doing alone. You need help with it as it can be risky. There are financial professionals who can help keep you away from the risky side of this investment property loan. MHF stands to offer the best financial advice when it comes to collecting loans. They have good connections as well as relationship with private lending entities which can help speed up things.
Talk to us as your financial adviser today!