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Important Factors to Consider When Financing an Apartment Property Purchase
09/29/2017

At Coburn & Feeley, we know that an investment property can be an important part of your portfolio.

With rental vacancy at less than 2% in Chittenden County, investment property has become an attractive option to many potential buyers. Mark Benton, a Mortgage PlannerInvestment Propertywith Regency Mortgage Corp. shares some great information if you’re considering a real estate investment property. Mark says that there are three major factors that will influence your investment property purchase:

· down payment

· credit score

· reserves

Conventional fixed rate financing is available for single family homes, condominiums, and 2-4 unit properties. Properties with 5 units or more will need commercial financing.

The down payment is the first important piece of investment property financing. Typically, 25% down payment is required for purchase. There are some options with 20% down payment for a single family investment purchase, but interest rate and points will be higher.

A strong credit score is also key. You will always get the best pricing with a 740 or higher credit score.

Reserves requirements have increased as part of the financing process. Typically, you will need to show 6 months of housing payments (mortgage, property taxes, and insurance) for the property to be purchased, along with 2-6 months reserves for each additional property depending on the total number owned.

With investment property inventory in short supply, it is very important to get pre-qualified for your financing before going out to look at properties with a realtor. Knowing all of your options upfront means that when you find the right property, you can act quickly.

Purchase and refinancing options with fixed rates are also available to investors who own 4 or more rental properties.

Mark Benton is a Mortgage Planner with Regency Mortgage Corp, located at 3 Baldwin Avenue in South Burlington, Vermont (NMLS 94675). He can be reached at (802) 448-2802 or mark.benton@regencymtg.com.

 


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