Financing Residential Investment Property – 5 Mistakes To Avoid!
1. One of the biggest mistakes made when financing residential investment property is to make a down payment as small as possible. Every dollar that is financed means a dollar in investment property loans that you will owe interest on, and this is interest which compounds. In addition putting a larger down payment on the property may help lower the interest rate that you pay as well.
2. When you are financing residential investment property not doing the necessary research and loan comparisons can be a mistake which can have disastrous results in the future. Locate and then compare the financing offered by land investment companies, banks, and other lenders, to find the best possible rate. This will help you get the best return possible on your investment.
3. A common financing mistake when buying investment property is not reading every word of every form and document before you sign anything. Make sure that all of the documents are clear, and that you understand all of the provisions and clauses before you agree to the terms of the financing and sign the loan agreement. Sometimes there are clauses in fine print which are undesirable, and not noticing any of these features could cost you later on.
4. Residential investment property involves some expenses, and taxes and insurance are two of the biggest. It is a mistake not to include these yearly amounts in your financing payments each month, so that these funds are deposited into an escrow account. This ensures that these payments are made on time when they become due, and prevents you from getting a surprise notice or risking the loss of your home if these amounts can not be covered.
5. Choosing the cheapest possible costs and lowest interest rate when financing residential investment property is an enormous mistake. Any lender that you choose should be honest and ethical, with an excellent business history and reputation as well as offering good terms and a low rate. This is true whether you want to finance rural property for sale or a commercial building downtown.