Real Estate Investment Loan
Are you interested in getting a real estate investment loan? If yes, then continue reading on. Today Noble Mortgage has put together four great tips for you to make your life easier as you apply for an investment loan.
Before we dive into our tips, we want to explain what an investment loan is. This is a loan you use to invest in a property. For example, if you buy a house for $120,000, your monthly payment would be $538.85 for a 30-year fixed rate loan with an annual interest rate of 3.5%. This means you can rent the property out for approximately $1,000 every month. After you expense the mortgage payment, you still make a profit of $461.15. In a year, you would profit $5,533.80. However, after you pay the loan off you get to keep all the money except when you pay for taxes and insurance. By the time you retire, this passive income continues to come in without you having to do very much work. Your money keeps growing!
This is why investing in a property is so attractive. The amount of money you gain in the long run is huge. If you are interested in starting in this business, you need to educate yourself first. Below are great tips you can use to find the right real estate investment loan.
Tip #1 – Have a Decent Down Payment
A good rule of thumb is to have at least 20% cash available for a down payment because most lenders will not approve a loan without a reasonable amount. However, if you put more money down, then you will qualify for a lower interest rate. This also means you pay less money in interest and will pay off the loan faster.
Tip #2 – Get Your Credit Together
Often a lender will not approve you for a loan if you do not have good credit. We recommend checking your credit score to make sure it is where it needs to be. If your score is low, then get a free credit report online to determine what is causing your credit to drop. We recommend working with someone experienced in credit repair to help you achieve the score you want. Remember this process does take time.
Tip #3 – Think Outside the Box
If you do not have good credit, you can look into a hard money loan. These are great for individuals who want to flip houses in the real estate market. However, these types of loans have a higher interest rate since it does not take your credit into account during the approval process. The process is much faster than a traditional loan. Also, you work with an individual investor instead of dealing with the bank, which means the process gives you fewer headaches. There is also owner financing. Before this option was taboo, but now it is more common.
Tip #4 – Stay Away from Big Banks
You may consider going to big banks to get a real estate investment loan. However, we must warn you that the fees and interest rates are much higher than if you went to a neighborhood bank. Local banks are often more flexible, have fewer fees, and competitive interest rates. The experience is personal, and your paperwork is taken care of faster than if you went to a big bank. You can ask around to find a great lender to work with.
If you are interested in becoming a real estate investor and need a real estate investment loan, contact Noble Mortgage. We have many financing options to get you started. You can call or fill out our form for a consultation. Our goal is to provide you with unmatched financing options so you can grow your investment the right way!