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Buying an Investment Property Different From Buying a Home?
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Buying An Investment Property
Question
If someone like me who has no knowledge in Real Estate Investing am I able to use the information in GetPreQualified.com's section called: Mortgage Loan Process - The Steps to Buying a Home if I were buying two or three properties for investments?
Answer:
The section we have on The Steps To Buying a Home is primarily written for people who are looking to buy a home to live in. However, it will serve as a relatively good guide to buying an investment property as well.
There are some differences in buying an investment property than buying a home to live in (this isn't all of them, but this covers the major things):
- buying an investment property takes more down payment and will be more expensive in terms of interest rate and maybe even points than a regular mortgage for a owner occupied home.
- You will also be required to have good income and cash flow so that you can qualify for the payments.
- The underwriter may or may not accept the leases that currently on the properties in question. Even still, what ever lease income that is coming in from the tenants you will only be able to use 75% of it to qualify, again if the underwriter lets you use it.
If You Are a New Investor Buy One Property At a Time
If you are buying your first investment properties, and I were working with you as a loan officer, I would encourage you to look at purchasing one property at a time instead of all at once. This will give you a chance to go through the experience, get the keys, and take over responsibility for the property. When you are through with the first one, do the next one.
Remember, everyone in the mortgage industry is a little skittish still since the mortgage meltdown last year. It is important for you to come into purchasing property as confident and as strong financially and credit wise as you can. Perhaps you are already there, maybe you aren't. I would call a few mortgage brokers in your area and find out what they suggest and have to offer. You can find access to them if you drill down to your city and click on Mortgage Lenders.
Good Luck
Answers By EdGAR. EdGAR has been in the mortgage and real estate and credit business since 1996. This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
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