Monthly Archives: July 2018

Mortgage in Real Estate Investment

Investment mortgage, as it is generally called, is the mortgage that is invested in real estate property – either residential or commercial. You can find mortgage lenders, who are ready to provide real estate investors with money. Though applicable for both residential and commercial properties, mortgage lenders see residential property as ‘safer’. The collateral here is the home. The secure feeling by mortgage financiers can be the feeling that no one is likely to make default on payments on a loan, taken with their dwelling place as collateral.

Investing in real estate is always a good option. You can either make an initial investment on a home, that you would rent out for a few years and sell the property, once the value of the property makes considerable appreciation. If you prefer not to sell, you can also used the appreciated value to take additional mortgage loan, which you will invest in yet another property. This is the usual strategy. The key here is to find a mortgage that requires you to pay little to no prepayment fine. You close the loan when there is considerable capital appreciation and sells it off after taking your profit.

Since you are not a seasoned real estate investor, doing business with a mortgage lender for a long time, you need to shop for lower cost mortgage loans. Of course, the first thing in this regard is your credit score. Once you are found eligible to get a home mortgage for considerably low interest rate, you can start your investments in real estate. It is not actually a big deal to find a mortgage to make an investment on a home or commercial property.

It is always a good idea to go through a critical analysis of the possible appreciation of the property on which you look to invest. You need to repay the mortgage and still carve out a profit out of it.

You can start investing in real estate, even if you have bad credit score. Your low income or lack of financial support too doesn’t prevent you from creating wealth out of real estate property that you buy on mortgage. For the first time, don’t put your eyes on the success levels or strategies of big guns in the field. You are starting out as a newbie – make your small investments, and separate your profits. Soon you will find what works for you.

The safest route will be to put your eyes on capital appreciation, consider renting out as a second option only. Hold the winners and drop the losers – better still, don’t ever catch a loser.

Commercial Mortgage Financing

If you have ever wanted to know what the different types of Commercial Mortgage Financing are available…there are many. Each type refers to different types of properties and verification methods. Not all Commercial Lenders offer all types of Business Investment Services so be aware and get a good Commercial Finance Broker and they will be able to set you up with the appropriate Commercial Property Financing that fits your needs,

Apartments – These can be solid investment opportunities. Apartments are generally a great form of security for a Apartment Loan Company. So long as the property is managed well, apartment buildings will serve as a long term positive cash flow as well as generate equity as time passes

Health Care Facilities – A Commercial Mortgage can also be used to finance health care facilities. Commercial Investment Services like this type of investment for two strong reasons.  First, you are investing in a conventional business that is experiencing an incline in popularity as well customer base. Secondly, as with most real estate,  an investment in land and facilities will appreciate over time, regardless of temporary market fluctuations, which will create equity for you. Purchasing of building this type of property and business is very attainable when you see just how available a Business Property Loans really are.

Industrial – Most traditional Commercial Lending institutions have programs for Industrial properties which will permit investment in industrial properties. Reason being is that investments in industrial property is generally a solid investment as there will always be a need for industrial space, regardless of the up and downs in the market.

Manufacturing – Companies looking to expand by increasing your manufacturing capacity may find that a Commercial Mortgage may be the way to accomplish this. An Industrial Mortgage can help to finance the growth of your manufacturing facilities and thereby increase your business in the process.

Warehouse – Most companies can not continue to grow and be thriving without increased capacity for inventory. Should you find your business is ready to do just that… take it to the next level…a Commercial Mortgage may be just what you need. Several large Commercial Lending firms have Warehouse Mortgage Services designed to finance your warehouse expansion, so with that said, don’t procrastinate or hesitate to contact your Commercial Loan Broker today for your planned expansion.

Retail Structures – Building or buying a store? Retailers need financing to, increase their exposure and generate new business as well as maintain the business they have.  Retailers use Retail Investment Mortgage Financing when they are ready to fund projects as well.

 Office Complexes – One of the best rental opportunities is Office Parks and Office Buildings as they are less likely to be vacant as that of retail space. And yes, they are also users of Commercial Mortgage Financing

I am sure you see the trend here…Commercial Mortgage Financing can be used in practically any industry for any kind of commercial property. Speak with your Business Finance Broker when you are ready to invest in a Commercial Real Estate opportunity.

Wade Henderson

Wade Henderson is a recognized Expert in the Business Finance World with over 14 years Experience in the Commercial Lending Field and a strong reputation for getting the deal done. Visit IMMFinancial.com to put his experience to work for you.

Investment Property Loan Types

An investment property mortgage is a loan for non-owner occupied property. There are two main classifications of investment property mortgages. These classifications include: commercial and residential. A commercial property mortgage is for a dwelling that contains 5 or more units and/or is zoned as commercial. A residential investment mortgage is for a dwelling that is one to four units and is zoned residential. Commercial and residential mortgages are two completely different loan types and have significantly different qualification standards. The following is a basic description of each mortgage type.

Residential Property Investment Loans

Residential property investment mortgages have similar qualification guidelines as standard owner-occupied mortgages. Although, they do have higher down payment and credit score requirements. Below is a summary of the general guidelines for residential investment mortgages.

• Credit Score Requirement – The minimum credit score requirement is typically 680 or above for investment mortgages.

• Debt to Income Ratio – Typically, the debt ratio limit for an investment mortgage is 40% of the borrower’s verifiable income. Besides W2 income, the borrower’s last 2 years tax returns will be needed to calculate the income that can be used from other rental properties or other sources of income.

• Down Payment – Investment property mortgages require at least 15% down, but the down payment requirement increases with lower credit scores and the greater the number of units in the property.

• Income – Lenders typically will only use rental income if the borrower has a two-year history of owning rental properties. This is usually documented via the tax returns and schedules.

Commercial Property Investment Loans

Commercial loans typically have higher rates, greater fees, and shorter terms than residential mortgage. The two most important factors for lenders on this loan type include: a positive cash-flow for the property, and the borrower’s past commercial property management experience. Below is a summary of the general guidelines for residential investment mortgages.

• Credit Scores Requirement – The minimum credit score requirement is typically 720 to 740 for a commercial loan.

• Down Payment – The minimum down payment for a commercial mortgage is typically 30% or greater. When refinancing, the maximum equity position is usually 70% of the appraised value of the property.

• Debt Service Coverage – This is a ratio used by lenders to calculate the property’s ability to generate cash flow. It is a calculation comparing the net operating income minus the mortgage payment and the other debt payments.

Investments – Mortgage

Perhaps interest rates have increased since purchasing your house. In that case, you will not be able to save anything on this item.

However, another home mortgage matter whether to pay off your mortgage early or not. The main thing to consider if you are thinking about doing this is whether you need that interest payment which is a major tax deduction in order to keep from paying higher income taxes. That is, for most average families, that home mortgage interest deduction is your major deduction unless you have business deductions. If this is the case, you might want to pay your mortgage off early but not too early. For the usual 30 year mortgage, rather than concentrate on paying it off in the next 5 or 10 years which would put a very heavy burden on you financially, you might want to concentrate on paying it off in 20 years instead of 30 years. If you can pay just a small additional amount each month, you can end up taking a year or more off of the length of your mortgage.

One reason for deciding to pay off your mortgage early is to avoid being caught in the situation of wanting or having to sell your house but owing more on it then you can get for it. Therefore, you can’t sell it right now because you would still be paying off the extra amount. But you still want to move so you need to work at getting the remaining mortgage down below what your house is worth on the current market. If you will need to move to different locations throughout the next 30 years, it is a good idea to try to pay something extra on your monthly mortgage in order to pay it down.

If you still want to pay off your entire mortgage in 5 or 10 years, you will need to pay an additional payment each month. Paying two payments a month will cut your 30 year mortgage down to approximately 10-12 years. However, will this help you? That is, what happens in 12 years when you no longer have your mortgage interest payments to declare on your income taxes and thus have higher taxes to pay the government? If, at that point, you will be retired, you should be in a lower tax bracket and may not need the added deduction of mortgage interest. However, if by then you are in a higher tax bracket (usually our careers and pay checks advance as we get older), you may need that extra deduction even more then you do now.

If you want to pay your mortgage off early but not quite so quickly, say in 25 years, just pay an additional amount onto the equity each month. If your mortgage payment is $1,198 per month, you could write a check for $1,225 each month remembering to list on the payment slip the additional equity amount you are paying. This is a particularly good method for someone who is older and is buying a home. If you are 35 years old, you will be paying on your mortgage until you are 65. What about saving for retirement? In this case, it might be better to pay it off even a couple of years early so you will have less expense when you retire.

However, if you are reading this article in order to cut back on your expenses today, refinancing at a lower rate of interest is the only viable option (also see the section on increasing your income for ways to use your mortgage to your advantage). If you cannot refinance at this time, you need to look at changing your life style, hopefully for the better, by selling your house (if its current market value is more then you still owe on it) and moving into an apartment.