Creative Home Financing For Investors

The finance property industry usually works according to the 80-20 rule. This rule usually states that for a piece of property, you must pay 20% down and 80% on loan. Nowadays, things have changed and there are dozens of ways to finance your property purchase. But that is right for you?

1. Financing Your Property

With as many ways to finance your property as there are properties to finance, you will want to carefully consider your financing before you buy. You could go for a second mortgage, but you could also use the equity of your home to help pay down your principal amount. Alternatively, you could refinance and extend your payment from 25 years to 30 years. This would give you a much lower monthly payment at the downside of the company making more money from you overall.

2. Investing For Less

The downsides are not limited to a higher interest rate or a longer mortgage, however. Since the buyer doesn’t meet the standard 20 percent minimum, lenders almost always require insurance and the fees can quickly add up.

3. Alternative Sources Of Financing

For those truly ambitious, you can find other sources of money to finance your purchase. When considering property in a new development, such as a planned community or new housing tract, manufacturers will often be willing to fund a home loan for early buyers.

4. Subject To Deals

This is a unique engagement with the seller where you never legally assume the loan, but simply start making the payments. This might sound confusing, but it’s really quite simple. There are lots of variations on this new way of buying property, but it is not recommended for your first investment.

5. Low Income Programs

If you have a less than perfect credit rating or are doing military service, you might qualify for a loan program from the government. These are almost always limited both in supply and have stringent requirements, but they can be a boon for those they are intended to serve.

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