Investing in property is a great investment, even if your financial situation requires loans to do so. While many people will advise that you do not invest in property without paying cash, investment property loans are not as bad as some people consider. Of course, it’s ideal if you pay cash for additional properties seeing as how you don’t want a number of large loans in your name, beginning the investment business is often not doable without an investment loan. Read on to find out everything you need to know about getting the best investment property loans.
Clean Up Your Credit
Don’t assume that just because you are already a home owner you have the kind of credit it takes to get a good investment loan. In fact, you need to spend some time cleaning up your credit prior to applying for investment loans. You could have mistakes, misreports and other issues that need fixing. It’s better to find out about them prior to being approved for a loan so that you get the best possible rates. Finding out afterward and then trying to correct these mistakes might be too late.
Do Your Research
When applying for an investment loan, you’re going to need to do ample and thorough research. Banks are not as excited to lend money to investors as they are to homebuyers for their primary residence, so it is imperative that you take the time to figure out exactly how this home or property will become an investment, how so, and have it detailed to the max. The bank will appreciate this, and a well-researched proposal is more likely to garner loan approval than one under-researched and superficial.
Have a Down Payment
A down payment is almost always needed when it comes to financing an investment property. You will need at least 30% down, but more is often helpful and may increase your chances of obtaining a loan. A down payment is a good way to keep your loan balance lower and to have a bank look at you with more seriousness. Don’t be shy about it; admit you have a down payment to see if banks are more willing to work with you.
Don’t settle on the first loan you see. You need to look around. Never is it more important for you to obtain the best rates and terms than it is when an investment loan. These loans are often a bit more challenging because there are many stipulations. For example, there are different rules, terms and rates for properties that are considered commercial than there are on properties considered residential. Know what you’re looking for and make the best possible decision. Compare everything before making a decision.