| |
| |
|
Nationalrealtyresource.com
|
| Home | Find a topic | Links | Guest Book |
| Welcome |
|
|
|
Investing in Real Estate Profitably: Eliminating the Need for Mortgage Insurance
In an earlier article, we presented various options for ensuring that you have positive cash flow when holding rental houses, by minimizing loan payments. One problem which we now can address is to how to eliminate the need for paying mortgage insurance. If you want to pay less than 20% down, the best way to get around mortgage insurance is to finance your purchases with two loans, a first and a second mortgage. For example, the first mortgage is commonly 70%, 75% or 80% of the purchase price and the second mortgage makes up the difference to 90% or 95% of the purchase price. You can get both mortgages from the same lender, but usually you can find better rates on the second mortgage from a lender that specializes in second mortgages. An independent loan broker can put this together for you nicely. Both mortgages typically close escrow at the same time and both lenders are fully aware of each other. For simplicity, put both loans in the same escrow and sign them both at the same time. If you want to be tricky and try to use two mortgages to get to 100% financing (i.e. no down payment), there are ways to do this, but we do not recommend it and it is not within the scope of this article. The second mortgage is typically at a higher interest rate than the first, but not always. For example, there are some very competitive home equity lines of credit (HELOCs) with rates only a fraction above the prime interest rate. You have to have good credit scores to qualify, but if you do, they are very attractive. The problem with a HELOC based on the prime rate is that it assumes the prime rate does not get too high before you pay it off. As you may recall from the early 1980s, the prime occasionally does go sky high and it could happen again. There is a particularly wide variation in the interest rates for second mortgages from various lenders. Moreover, if your credit, income, and assets are not ideal, you may not be qualified for certain second mortgage programs, so it may be more difficult to find a second mortgage at a good rate that you do qualify for. It is very important therefore to ask your independent loan broker to check out various options and to shop the rates. He/she should be comparing at least half a dozen different second mortgage programs. When you use two loans as described above, it is usually advisable to have an interest-only or minimum payment loan for the first mortgage. This allows you to focus on paying down the principle on second mortgage over a period of say 5 years, if you can afford it. If you cannot do that, than obtain a second mortgage that also has a 5-year fixed period and an interest only option. You are then covered with predictable and low payments for at least 5 years. This article has reviewed a strategy for improving your cash flow when purchasing investment rental homes -- namely, using two loans to eliminate mortgage insurance. There is much more to say on this topic. So keep an eye out for additional articles by the same authors on this and related topics. (c) Copyright 2004, Jeanette J. Fisher and Robert S. Kramarz. All rights reserved. Jeanette Fisher, Design Psychology Professor, is the author of "Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits," the only book to reveal interior design secrets on how to make top dollar investing in real estate. For real estate and interior design psychology books, articles, tips, and newsletters: http://www.doghousetodollhousefordollars.com. Robert S. Kramarz is a loan officer for a major loan brokerage. He has over 20 years experience in finance and business management and comes from a family a long background in real estate investing and banking. He specializes in providing financing for purchase of investment real estate. He can be reached by email at MrFunding@22cv.com. Further information is available at the website http://www.sweetloan.info.
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
The New First Impression in Home Selling As an ASP Home Stager® I know how important curb appeal can be in making that critical first impression when selling your home. However, with the growth of real estate advertising over the web, there is another first impression that you should consider when marketing your property. San Diego Real Estate San Diego is home to millions of beautiful apartments, condominiums, and single-family homes. Depending on the type of living arrangement you're looking for, and how much space you'll need, you should look at the appropriate San Diego real estate listings that fit your preferences and budget. Maui Realtors: What You Need To Know Maui is a great place for families of any size. However, before you plan a move to Maui and contact those Maui Realtors, there are some considerations that you should take care of. Buying Property in Spain You have made the decision to move to Spain and are now looking for a property to buy? Where do you start? Firstly, I would suggest you go on to the internet and look at the various agents that are offering properties for sale in Spain. Many of these companies are run by people who have already emigrated to Spain and will know the many problems and pitfalls that arise when buying a property in Spain. If You Cant Afford to Retire...Move According to Warren Bland, PhD, an award-winning author and geographer at Cal State, people have a great option. It's called "equity-take" that is, the difference in cost of comparable housing between your present community and the more affordable one to which you could move. Commercial Real Estate: Assessing The Unique Features Of Commercial Real Estate Parcels As commercial real estate development progresses into the 21st century, many of the principles upon which the market was founded remain the same. Whether you are a property owner, developer, or commercial real estate agent, identifying and marketing the unique features of your commercial property will maximize the attractiveness of the site to prospective buyers or tenants. How to Find the Sweet Spot in Real Estate Investing Psssssssssst, Want to know a great way to make FAST money in real estate? Listen closely now because this tip is definitely cashable.. Property Types A, B, C And D One of the biggest problems individuals just starting out have is the type of property they look for, and working outside their immediate area. One of the constants around the country and for every state, is that there are the most desirable areas to live and the least desirable; and then those that fall in between. Sell Your Home Without a Realtor and Save Thousand$$$ A typical real estate commission on a $234,000 home (national median price for all existing homes as of July 2005) is over $16,000. In many areas the cut a real estate broker gets is much higher. What is a Home Inspection? Any Sally and Sam Homebuyer can look at a home and decide whether it is attractive. They might notice it is freshly painted in pleasing colors, has the requisite number of rooms, a cook's kitchen and is located in a location with top schools. Conditions Are Right For Buying The Higher Priced Home You'Ve Always Wanted Higher interest rates and home prices in the past have kept home owners from purchasing larger homes. The current real estate market conditions, however, are encouraging for many home owners who want to "buy up" to higher priced homes with more to offer. Refinance Rental Property - Dont Sell It You own a rental property for years, and never see the "big pay-off." Is it time to cash in on your investment, now that you've paid down the mortgage, and values are up? Maybe not. Panama is Hot - A World Class Retirement Haven Thats Ripe For Profitable Real Estate Investment If you've followed any of the major survey agencies around the world that rate places for retirement, Panama has been on top of the list in many, and for a few years running. So, if you're looking for a place outside U. Property Investing Secrets 3 Property Investing Secrets: When you Make Property Easy to Buy for People Using Vendor Finance It Is Easy To SellWhen property investing, my goal is to make it easy for people to buy my properties, that's why I offer vendor finance. You have the advantage when you buy properties from sellers when property investing. Lake Property in Danbury A lakeside vacation or second home can be a quiet and relaxing place to escape to, or simply a good investment in your financial future. Whether you enjoy the outdoor activities and recreation provided by one of Connecticut's beautiful lakes, or you just want a place to get away from it all, there is a lakeside home for you in Danbury. Things To Consider Before Buying a Condo Hotel or Resort Residence Resort home ownership, such as condo hotels and fractional shares is different from typical home ownership. So it is important to ask certain questions before signing the purchase agreement on a resort property. The Listing Agents Role in Selling Your California Home Advertising to the "Public"Every home seller likes to be assured that their listing agent and or their real estate company will run ads featuring their home. Newspaper ads range from color photo ads to lots of listings reflected on a page with primarily only copy. Dont Sell It Yourself Don't sell it yourself! Sometimes a "FSBO," or house "for sale by owner" can sell as fast, and for as much as it would have if listed with a real estate agent. Sometimes. How To Build A Million Pound Property Portfolio Looking to quickly build a million pound property portfolio? You could try a high risk and speculative technique that has been used over recent years by investors hoping to make big profits from property.The technique relies on re-mortgaging and negotiating good discounts on off-plan property to take a £50,000 deposit and turn it into a million pound property portfolio within a couple of years or less. Renting a House Renting a house or a room in your home is a great business that millions of people take advantage of to make some extra cash. While many people rent houses each year, not all of them are successful.
|
| |
| |
|
Home | Guest Book |Site Map | Recommended Resources | Search Powered By: TJTMEDIA |
| © 2006 |
