California is a wonderful state for investment properties. An investment property is a real estate property that has been purchased with the intention of earning a return on investment. This can be done through rental income, the future resale of the property, or both. If you’re planning on buying an investment property, you’ll need an investment property mortgage. In this article, we’ll take a look at these mortgages so you have a clear understanding of them when it comes time to put an offer in on a property. If you need assistance purchasing or selling a home, contact the agents at American Dream Realty in Woodland Hills today!
Investment Property Mortgages in California
When you make the decision to invest in an investment property, you’ll need an investment property mortgage as well. Many real estate agents and consumers will refer to this kind of loan as a rental property mortgage, however, lenders like to refer to this type of loan as a non-owner occupied mortgage. Since lenders categorize loans by their occupancy, there are three types of home loans to consider.
Owner Occupied Mortgages
This type of loan is for people who wish to purchase a home that they intend to live in as their primary residence. Owner occupied mortgage loans require you to move into a home within 60 days of closing the loan, and owners must live there for at least a year. Once the year has passed, they are then allowed to rent out the home to other people, but their loan terms will not change.
Second Home Mortgages
As you may have guessed, second home mortgages are for people buying a home that they wish to use a second home for family and friends. Lenders often prohibit the rental of these homes by the homeowner.
Non Owner Occupied Home
This type of loan is for people who want to purchase a home for the sole purpose of renting it out. If you eventually want to convert your rental home into your primary place of residence, you are free to do so. This will not change the terms of your loan.
At American Dream Realty in Woodland Hills, we’re proud to offer California residents a one-stop-shop for all of their real estate and mortgage needs. If you’re interested in learning more about purchasing an investment property, contact our agents today!
Tips For Financing Your First Investment Property
Before you put down the down payment for your first investment property, it’s important to have a thorough understanding of your finances. For homebuyers who are looking to diversify their investments beyond stocks and beyond, consider the information below.
Your Personal Credit Profile
Your personal credit score will have a tremendous impact on the type of mortgage loan you can acquire for your investment property. You can view your credit reports from the three main credit bureaus: Experian, Equifax, and TransUnion. Once you have an understanding of where you stand credit-wise, you’ll have a better understanding of the terms and conditions you’ll be able to qualify for on a loan. As soon as you have reviewed your credit reports, it’s best to consult with an expert before you decide to take action on any items like closing accounts or paying off loans. Some of these things can actually have a negative effect on your credit score.
If you end up not being eligible for a loan based on your credit score or other qualifications, it’s important to know that all is not lost. There are some things you can do to improve your credit score, such as paying off debt and disputing errors, and a professional will be able to recommend the best course of action to improve your score.
Understanding Your Numbers As An Investor
If you’re thinking about buying an investment property, you probably have specific goals in mind. While some investors like to buy rehab properties and fix them up to sell for a large profit, others may want to buy a home to rent out so they can make a little money each month. Whatever approach you decide to take, it’s important that you have a thorough understanding of the numbers associated with purchasing a home. The cost of financing, a down payment, advisor fees, and repairs should all be considered. Make sure you’re being realistic about what you can afford, especially when it comes to your mortgage payments.
At American Dream Realty in Woodland, we’ve helped hundreds of people find the perfect investment home for their budget and needs. We offer a full gamut of real estate services, from buying and selling to mortgage and loan assistance, our real estate agents can handle all of your needs. All of our agents are well-versed in the California real estate market and we’re dedicated to your complete satisfaction. Contact us today to learn more!