First things first — what is an investment property? It’s property that you own to generate rental income or profit upon resale. And oftentimes, getting a mortgage on an investment property is a little different than securing a home loan for a personal or primary house.
Real Estate Investment Properties
If you’re looking at buying a home as an investment property, first determine how this property will be used.
Many people purchase investment properties to rent out to people looking for a vacation spot, or to students on a college campus, while others are looking to take advantage of the “fixer upper” and HGTV phenomenon and flip houses to make money. Ultimately, it’s important that you make smart investments, and always have a short-term and long-term plan to ensure you’re getting this most bang for your buck.
Bottom line — know your goals for your investment property before starting the home loan process.
Buying an Investment Property
If you’re ready to buy an investment property, use these steps to set yourself up for success during the home loan process.
- If you don’t have 100% cash to pay for your new investment property, become a Certified Home Buyer. It gives you many of the perks of a cash buyer so once you find a rental property you’re interested in buying, you can put in a legitimate offer quickly and close quickly.
- Work with an experienced real estate agent who has handled investment property before.
- Make sure you have your down payment worked out—most lenders will require you to provide at least 20% down and to have access to additional cash reserves for at least 6 months.
The Best Loans for Investment Properties:
When you buy an investment property, you have access to a lot of the same mortgage private programs as those who are buying their primary homes.
- 30-year fixed-rate loan: Your monthly payments are lower but you’ll be making payments longer. For some, this option gives more flexibility to the homeowner.
- 15-year fixed-rate loan: The loan is paid off quicker. The life of the loan is shorter and you usually will have a lower interest rate and save on interest.
Interest rates and terms available will vary based on the property, the loan amount, and your personal financial information. To find out today’s investment property interest rates, reach out to one of our experienced Home Loan Specialists.
The Churchill Certified Home Buyer program is not a commitment to lend funds and is not an approval but is a conditional approval subject to your acceptance of the terms and the conditions being fully satisfied prior to closing. All conditions are subject to final underwriting and final investor approval. The certification is subject to the financial status and credit report(s) of everyone on the application remaining substantially the same until closing, an acceptable contract of sale on a suitable property, collateral (the appraisal, title, survey, condition, and insurance) satisfies the requirements of the lender and loan selected is still available in the market. All closing conditions of the lender must be satisfied including the clear transfer of the title, acceptable and adequate title and hazard insurance, flood certification, and any inspections that are required by the real estate contract. The Certified Home Buyer and Rate Secured programs are not available at all locations.