Taking Over Payments- Simple Way To Buy First Investment Property
You could take over payments as a method of acquiring an investment property for the first time and as you add to your investment portfolio. This is one of the latest trends in real estate that yields profitable results.
There are certain loans that you can easily take over payments on. According to the American Bankers Associations report one trillion dollars worth of fresh mortgages were built by refinancing old loans in one year. Moreover, these loans had extremely low fixed interest rates ranging between 6 to 8%.
What it means to real estate investors nationwide is there're trillions of dollars in highly desirable low interest financing locked up in houses people own right where you live. Wouldn't it make sense to learn how to take over payments on these existing mortgages that somebody else qualified for and obtained - to buy the very houses the loans are attached to?
There are quite a few things that you need to consider when it comes to taking over payments of already existing low interest rate real estate loans versus getting a brand new loan on investment houses. Lenders of these real estate loans are much rougher with real estate investors in comparison to homeowners. The most basic evidence proving this higher interest rate payment for the former compared to the latter.
Once you succeed in taking over payments, be assured of the low rate of interest at which you will be paying unlike other real estate investors. Thus, your loan repayment expenditure decreases considerably increasing your monthly cash flow. In the future if you decide to sell the property with proprietor financing and maintain the original loan as well. You will be able to make a better deal on the interest and payments than the ones you assemble from your procurer.
Most of the money that you spend as loan payment expense will be for interest rate payment purpose. Only a fraction of this will be allotted to the principal reduction. Since the interest rate on the existing loan is lower, your interest payment will also be lower on the total real estate.
But that's just the beginning. If you're getting an investment property loan you'll be required to come up with a lot larger down payment amount than a home owner has to. You'll need to have at least 20% down while home owners often get away with as little as 3%-5% out of pocket.
Moreover, real estate investors have to show at least 6 months worth of payments in cash reserves while a homeowner can get away with just 2 months in reserves. If you're taking over payments on a homeowner's existing loan, you'll no longer have to come up with a large 20% down payment. This, in turn, means with the same amount of capital you can buy a larger number of properties.
But we're still not quite done yet. When you take over payments on an existing loan you benefit from all the loan payments previously made by the owner. Remember, the owner has originated the loan 2, 5 or even 10 years before you came along wanting to take over payments. The more payment the owner made on the loan you're taking over, the fewer months and years are left to pay on the loan until it is completely paid in full. So, taking over payments on existing loan speeds up the process and allows you to pay-off the loan balance and build up your equity a lot quicker.
Lastly, you must remember that this taking over process spares you from the dreary process of qualifying for mortgage loan. The required paperwork has been duly done by the person you are buying the house from. Since he was qualified enough to obtain the loan, you could bask in this benefit!
If you haven't tried taking over payments you're missing out on what may be the easiest, cheapest and profitable way to fund your real estate investment purchases.
There are certain loans that you can easily take over payments on. According to the American Bankers Associations report one trillion dollars worth of fresh mortgages were built by refinancing old loans in one year. Moreover, these loans had extremely low fixed interest rates ranging between 6 to 8%.
What it means to real estate investors nationwide is there're trillions of dollars in highly desirable low interest financing locked up in houses people own right where you live. Wouldn't it make sense to learn how to take over payments on these existing mortgages that somebody else qualified for and obtained - to buy the very houses the loans are attached to?
There are quite a few things that you need to consider when it comes to taking over payments of already existing low interest rate real estate loans versus getting a brand new loan on investment houses. Lenders of these real estate loans are much rougher with real estate investors in comparison to homeowners. The most basic evidence proving this higher interest rate payment for the former compared to the latter.
Once you succeed in taking over payments, be assured of the low rate of interest at which you will be paying unlike other real estate investors. Thus, your loan repayment expenditure decreases considerably increasing your monthly cash flow. In the future if you decide to sell the property with proprietor financing and maintain the original loan as well. You will be able to make a better deal on the interest and payments than the ones you assemble from your procurer.
Most of the money that you spend as loan payment expense will be for interest rate payment purpose. Only a fraction of this will be allotted to the principal reduction. Since the interest rate on the existing loan is lower, your interest payment will also be lower on the total real estate.
But that's just the beginning. If you're getting an investment property loan you'll be required to come up with a lot larger down payment amount than a home owner has to. You'll need to have at least 20% down while home owners often get away with as little as 3%-5% out of pocket.
Moreover, real estate investors have to show at least 6 months worth of payments in cash reserves while a homeowner can get away with just 2 months in reserves. If you're taking over payments on a homeowner's existing loan, you'll no longer have to come up with a large 20% down payment. This, in turn, means with the same amount of capital you can buy a larger number of properties.
But we're still not quite done yet. When you take over payments on an existing loan you benefit from all the loan payments previously made by the owner. Remember, the owner has originated the loan 2, 5 or even 10 years before you came along wanting to take over payments. The more payment the owner made on the loan you're taking over, the fewer months and years are left to pay on the loan until it is completely paid in full. So, taking over payments on existing loan speeds up the process and allows you to pay-off the loan balance and build up your equity a lot quicker.
Lastly, you must remember that this taking over process spares you from the dreary process of qualifying for mortgage loan. The required paperwork has been duly done by the person you are buying the house from. Since he was qualified enough to obtain the loan, you could bask in this benefit!
If you haven't tried taking over payments you're missing out on what may be the easiest, cheapest and profitable way to fund your real estate investment purchases.
About the Author:
One of the little known secrets of real estate investment success is to take over payments on existing loans from owners who have vacant houses.
posted by Debt Consolidation Loan at
4:15 AM
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