Financial Planning

Investment property is a property whose value appreciates over a period of time and is purchased mainly for the purpose of making financial profits. An investment property can be agriculture farmland, apartment, commercial building etc. It is often very difficult to make huge down-payments, which is why investors often go for loans.

Investment property mortgage is a loan taken to purchase an investment property, take for instance a Las Vegas Vacation property,and needs to be repaid along with the interest over a fixed period of time. Investment property mortgages can be obtained from banks, financial institutions and also private mortgage brokers who approve the loans depending on the salary and the financial background of the person. The borrower will need to submit the necessary documents like proof of salary, details of the investment property for which the loan is being applied, credit report etc. There are different types of mortgages for investment properties. They are fixed-rate mortgages, adjustable-rate mortgages and balloon or reset mortgages.

Fixed-rate mortgages are more common since the interest rates remain same throughout the period of mortgage and hence the monthly payments are stable. The interest rate in this type of mortgage doesn’t get affected by the market rates. The risk of having to pay huge amount due to inflation is eliminated with fixed-rate mortgages. At the same time, one does not benefit with decrease in market rates and will have to pay the same interest rate agreed upon while taking the loan.

Adjustable-rate mortgages (ARM) are mortgages that have variable interest rates (and were popular for Las Vegas NV investment property before the big bust). The monthly payments are not stable and hence keep varying throughout the mortgage term depending on the market rates. The advantage of this type of mortgage is that it starts with lower monthly payments and lower interest rates. The interest rates can change anytime and affect the monthly payments. Before applying for ARM one must be aware of the terms of the mortgage.

Balloon or rest mortgages are the loans which have a 30-year repayment schedule. This type of mortgage provides with an option of either paying the remaining principal or resetting the mortgage with current market rates at the end of a 5 or 7 year term. This mortgage is best for people whose income may increase considerably over the time and can afford to pay off the whole mortgage in few years.

Choosing the type of mortgage depends on the convenience in repayment. One must decide the type of mortgage after being thorough with the repayment options and interest rates. Doing sufficient research and acquiring knowledge about mortgage rates and offers from different financial institutions and banks can help in finding the mortgage that best suits the borrower’s requirements, meaning the borrower can focus on their investment and make money.