Take Over Payments, No Qualifying For Loans To Buy Properties
One of the most powerful weapons of real estate investment is taking over payments of existing financing to purchase homes.
Wondering if there are enough good loans out there for you to take over payments on? An estimated trillion dollars was recently put into mortgages solely out of refinancing existing real estate loans. These debts carried a fixed rate of interest that is as low as 6 to 8 %.
This indicates that there remains about a trillion dollars worth of real estate investment that is booked under homes owned by people around you. It would be of great profit if you were able to take over payments of these unpaid real estate loans from someone elses name to your own. You can do this by buying the real estate properties having such low interest rate mortgages attached to them.
If you're still wondering why you should be taking over payments on houses as opposed to getting new investor loans, here're several things to consider. Compared to homeowners, real estate investors are penalized by mortgage lenders in variety of ways. For starters, investors have to pay higher interest rates on loans for investment properties than homeowners do.
Once you succeed in taking over payments, be assured of the low rate of interest at which you will be paying unlike other real estate investors. Thus, your loan repayment expenditure decreases considerably increasing your monthly cash flow. In the future if you decide to sell the property with proprietor financing and maintain the original loan as well. You will be able to make a better deal on the interest and payments than the ones you assemble from your procurer.
Taking over payments has another valuable benefit. Remember, the bulk of your monthly loan payments will go toward interest, while only a small portion of each payment will apply toward a principal reduction. With lower interest financing on the existing loan you're taking over - you'll pay less interest and overall for the property.
But that's just the beginning. If you're getting an investment property loan you'll be required to come up with a lot larger down payment amount than a home owner has to. You'll need to have at least 20% down while home owners often get away with as little as 3%-5% out of pocket.
Moreover, real estate investors have to show at least 6 months worth of payments in cash reserves while a homeowner can get away with just 2 months in reserves. If you're taking over payments on a homeowner's existing loan, you'll no longer have to come up with a large 20% down payment. This, in turn, means with the same amount of capital you can buy a larger number of properties.
But we're still not quite done yet. When you take over payments on an existing loan you benefit from all the loan payments previously made by the owner. Remember, the owner has originated the loan 2, 5 or even 10 years before you came along wanting to take over payments. The more payment the owner made on the loan you're taking over, the fewer months and years are left to pay on the loan until it is completely paid in full. So, taking over payments on existing loan speeds up the process and allows you to pay-off the loan balance and build up your equity a lot quicker.
Lastly, you must remember that this taking over process spares you from the dreary process of qualifying for mortgage loan. The required paperwork has been duly done by the person you are buying the house from. Since he was qualified enough to obtain the loan, you could bask in this benefit!
This method of taking over payments is one of the most profitable means of sponsoring your real estate investment.
Wondering if there are enough good loans out there for you to take over payments on? An estimated trillion dollars was recently put into mortgages solely out of refinancing existing real estate loans. These debts carried a fixed rate of interest that is as low as 6 to 8 %.
This indicates that there remains about a trillion dollars worth of real estate investment that is booked under homes owned by people around you. It would be of great profit if you were able to take over payments of these unpaid real estate loans from someone elses name to your own. You can do this by buying the real estate properties having such low interest rate mortgages attached to them.
If you're still wondering why you should be taking over payments on houses as opposed to getting new investor loans, here're several things to consider. Compared to homeowners, real estate investors are penalized by mortgage lenders in variety of ways. For starters, investors have to pay higher interest rates on loans for investment properties than homeowners do.
Once you succeed in taking over payments, be assured of the low rate of interest at which you will be paying unlike other real estate investors. Thus, your loan repayment expenditure decreases considerably increasing your monthly cash flow. In the future if you decide to sell the property with proprietor financing and maintain the original loan as well. You will be able to make a better deal on the interest and payments than the ones you assemble from your procurer.
Taking over payments has another valuable benefit. Remember, the bulk of your monthly loan payments will go toward interest, while only a small portion of each payment will apply toward a principal reduction. With lower interest financing on the existing loan you're taking over - you'll pay less interest and overall for the property.
But that's just the beginning. If you're getting an investment property loan you'll be required to come up with a lot larger down payment amount than a home owner has to. You'll need to have at least 20% down while home owners often get away with as little as 3%-5% out of pocket.
Moreover, real estate investors have to show at least 6 months worth of payments in cash reserves while a homeowner can get away with just 2 months in reserves. If you're taking over payments on a homeowner's existing loan, you'll no longer have to come up with a large 20% down payment. This, in turn, means with the same amount of capital you can buy a larger number of properties.
But we're still not quite done yet. When you take over payments on an existing loan you benefit from all the loan payments previously made by the owner. Remember, the owner has originated the loan 2, 5 or even 10 years before you came along wanting to take over payments. The more payment the owner made on the loan you're taking over, the fewer months and years are left to pay on the loan until it is completely paid in full. So, taking over payments on existing loan speeds up the process and allows you to pay-off the loan balance and build up your equity a lot quicker.
Lastly, you must remember that this taking over process spares you from the dreary process of qualifying for mortgage loan. The required paperwork has been duly done by the person you are buying the house from. Since he was qualified enough to obtain the loan, you could bask in this benefit!
This method of taking over payments is one of the most profitable means of sponsoring your real estate investment.
About the Author:
One of the little known secrets of real estate investment success is to take over payments on existing loans from owners who have vacant houses.
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