An investment property mortgage is usually used to finance real estate property that is purchased in order to generate income through rental income. It can open up more chances for mortgage brokers to offer more products and services to expand their business.
But why is it that many mortgage brokers tend to back off from presenting this to their clients? Though opportunities are high, the usual impression that comes to mind is that investment property mortgages are more complicated to offer to clients than other mortgages like consumer mortgages. They tend to be afraid that they might not be able to fully explain the program to the clients. The thought of the complex and time-consuming process also is their concern.
Consumer Mortgage versus Investment Property Mortgage
Many new and enthusiastic business owners apply for an investment property mortgage with the wrong or inaccurate idea that it is just the same as a consumer mortgage process. But it has its own details that make a distinction from a consumer mortgage. Let’s find out what the main differences in the process that an investor should be aware of before applying for a loan to support growing business and to help them make more informed decisions.
For loan applications, Fannie Mae 1003 Form is the standard loan application form used by most lenders. At Marques Direct, there is no difference in the application forms for consumer and investment property mortgages. Indeed, most of its brokers have an easier loan application which is more convenient for investors.
Sometimes people use investment property to refer to purchasing a home to live in because, for them, the property is a big investment. But investment property usually means buying a home to be rented out for profits. The additional income that an investment property carries through rental is usually the main reason why a lot of people own investment properties. If the property is fit for the intended purpose which means none or just a little maintenance is needed, the income becomes passive. Less work but still earns a profit. In consumer mortgages, applicants need to show proof of income to substantiate that they have the capacity to pay.
The Bottom Line
Mortgages are crucial to the part of borrowers who don’t have the money to buy any property they want anytime. So it is important to really understand what type of mortgage to choose according to your needs. Learn to look around and study different lenders so that you will be able to get the best deals.