Have you been thinking of investing in real estate to build future wealth for you and your family? Now’s a good time to start. Although property prices have risen, interest rates are sitting at historic lows, which means it will cost less over time to finance your investment property.
Real estate investment has proven to be a sound long-term choice for building wealth – and the earlier you start, the better.
Use home equity as a down payment
If you have equity built up in your primary residence, you can often be able to use these resources for the down payment on your investment property via a mortgage refinance or a home equity line of credit (HELOC).
One benefit of using a HELOC to help finance your investment property is that there is little or no set-up fee involved and you only pay interest on the portion of the HELOC that you use. And since this is a form of revolving credit, as soon as you pay down your HELOC, the money is immediately available to borrow once again.
If you choose to refinance, it’s important to know that there are penalties for paying out your existing mortgage loan prior to renewal, but these may be offset by the extra money you could acquire to put towards your investment property.
It’s wise to check with your mortgage broker to help weigh your financing options based on your specific situation. Working with a mortgage broker who’s an experienced real estate investor is beneficial for ongoing insight and information that will help you make informed investment decisions and feel at ease throughout each purchase – regardless of whether you buy one or 10 properties.
It’s important to understand that if the mortgages on your investment properties aren’t set up properly, you won’t be able to get future financing – a necessity if you plan to buy multiple revenue properties.