Finding A Good Deal In Financing Investment Property

2007-03-08 10:33:40

( Financial )



You are most likely to find good deals when you look for financing to buy your first home as your family's dwelling place, or when you get commercial financing for your business. But when you look for options in financing investment property, the first thing that you should do is to find any lender who is inclined to finance the purchase especially when the real estate market in general turns sluggish.

One of the obstacles you'll meet when looking for a financial institution that is willing to lend you the amount for financing investment property is your lack of intention to occupy such property. For this reason, lenders may require you to put up a bigger down payment, and/or to pay more points and higher interest rate. Lenders are aware that you will be more willing to allow foreclosure in an investment property in case you can no longer pay the financing. But you would never allow foreclosure on your personal residence because it can cause a major disruption in your life.

If you are resourceful enough, you will find that there is one option to get a better deal in financing investment property, which is in the form of an owner-occupied financing. In this kind of financing, you can get higher loan-to-value ratio especially from government-backed lenders. But one of the requirements is that you and your family have to move in the new house.

During your application, you should never claim that you plan to move in, although the truth may be that you don't have any intention of actually living permanently in the property. Upon approval of your financing investment property application, you should occupy the property for the first year, and then rent it out after such period. Otherwise, government regulators will penalize you, recommend for the cancellation of your loan, or do both.


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