If you want to buy a rental property but you don’t have 100% cash up front, you’re going to need a mortgage. You can go the conventional route with a bank, or you can look for a private mortgage lender to help you get there. Either way, you’re going to need to know what documents you need, research banks and lenders, find a real estate agent and nail down what kinds of costs you’re going to face before you buy the home. It’s important that you go in prepared – if you leave anything to chance you can easily end up with a foreclosure and bad credit.
How Much Can You Spend?
Before you even start looking at private mortgages, you need to know what your budget is. You don’t want to go off the maximum mortgage amount either; look at the down payment you’re willing to save up and multiply that by 5. You’re going to need 20% down to buy a home, even if it’s a rental or income property; if you can’t get that much money up you’re not going to do well when investing in real estate. It never hurts to make sure that you have as much liquid as possible to qualify for your mortgage application once you put it in either!
Start Looking at Lenders
Once you know your working budget, you’re going to want to start looking at different lenders. Don’t only look at private mortgages, make sure you look at conventional lenders too. You never know where the best deal is going to come from – after all there are so many lenders out there that are competing for your business. Make the most of your money while you have it, because good investments can be harder to come by than capital. From here you’ll want to be pre-approved for a mortgage; this just means that you’re ready to buy a home, but you’re not under any obligation to do so just yet.
Talk to a Realtor and a Mortgage Broker
Once you know how much you can spend and have a good idea of the lenders you want to work with, it’s time to talk to a realtor and a mortgage broker. They’ll be able to help you find a home and know if the mortgage deal you’re getting is actually the one that’s right for you. Getting a few expert opinions on the matter before you buy a home is the best way to go. Once you’ve found your dream home and a good conventional or private mortgage lender, it’s time to fill out the application.
Fill Out Your Loan Application and Wait
Filling out your loan application shouldn’t be too hard, work with a mortgage broker to make sure you’re doing it right. Now you’ll just have to wait for a couple weeks or a couple months to find out if you qualify. Once you know, you’ll be able to move on to the closing stage. If you were already pre-approved for your mortgage, you’ll be able to skip this step and move ahead!