Purchasing an Investment Property in Today's Economy

With interest rates reaching historic lows and with many properties listed as foreclosures and short sales, more and more investors are coming out of the woodwork. Indeed, there are several wonderful investment opportunities available for investors and first time home buyers alike. The irony is that with today's state of affairs and new mortgage guidelines, many homeowners looking for additional properties may not qualify. Should you be a homeowner looking to purchase an additional/investment property, you might want to keep the following in mind:
1. You are going to have to put over 20% down.
2. Expect a higher interest rate than your typical market rate. In retrospect, with interest rates still hitting historic lows, you should still be able to get a decent interest rate.
3. In today's market a mere lease agreement does not serve as enough proof that your existing property is rented. You may have to rent your existing property for a year and reflect the rental income in your tax returns.
4. It may also be helpful to make copies of rental checks received each month. The more information you can provide, the better your chances of qualifying.
5. Another trend we are seeing these days is that most lenders are more likely to finance your investment property if you have enough verifiable income and assets(income varies from lender to lender) to pay both mortgages each month.
6. If you already have a loan for four or more properties, you may not be able to finance your next purchase. Most lenders today are shying away from investors who have financed more than four properties.
Remember, qualifying for a loan is granted on an individual basis so do not be discouraged should you wish to apply. Despite these few challenges, with the right investor mindset and professionals, you can still continue to legally purchase homes to create your long term wealth.