Basics for Funding for an Investment Property
You've got big dreams of owning property and retiring young. You just don't have the funds to go out and purchase the properties in money (most of us do not either). This leads you down the route of funding with the regional bank. You can invest in global financial markets through single Northwest Capital Funds investment solutions without the need to know about the individual markets in detail.
Image Source: Google
Perhaps you already own your own home and have been through the process of being approved and signing the mortgage. This ought to be easy then perfect? Incorrect, investment property loans aren't like your traditional mortgage.
Lenders are stricter with underwriting an investment property compared to that of a personal mortgage. You may be wondering, but why? It's simple once you own investment property and a private residence and then you lose your job or things start going south financially you are going to pay your own personal mortgage prior to anything else in a worst-case scenario.
The interest rate is going to be higher than that of your home mortgage, it just is. Add 1-3 percentage points more than the owner-occupied loan rate. That means that if a lender charges 4.00% interest for homeowner loans, you'll likely pay 5-7% interest for investment loans.
As with any type of loan your credit matters. It reveals that the lender a history of your past credit experiences and essentially says why you need to find a loan or why you need don't get a loan.