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mortgages for the Investor

Written by: Tony Robinson

Not everyone that applies for a mortgage loan is a homeowner
seeking to purchase their dream home, or their first home, or
even their second home. Some of the mortgage market centers
around individuals who invest in property for the purpose of
increasing their investment portfolio, or building their
retirement fund. What are the differences in the needs of the
investor and the homeowner? There are some great differences,
and then there are some basic values that every person seeks to
fulfill when soliciting a mortgage product.

Let’s take a moment to examine the mortgage loan from an
investor’s viewpoint, and determine how their needs and
objectives differ from the average homeowner. As an investor, of
course the objective is to make money. You want a return on your
investment, preferably, as much as you can possibly get. This
means that you seek the lowest interest rate possible, with the
least amount of expenditure on your part.

The rising Real Estate prices, and the low interest rates, have
generated much activity in the investment area of the mortgage
and Real Estate markets, and many of these investors are fairly
new to the investing game. So what are the best bets in mortgage
loans? Interest only loans have everyone buzzing, especially the
investor. Why? These loans require very little expenditure on a
lot of Real Estate. Many of the interest only products out there
today, do not require the homeowner to make a down payment, nor
do they require the investor to make a down payment. Unlike
traditional loans, the payment each month only requires that you
pay the interest due on the principal. This equates to less cash
out for the investor, and more retained for improvements to the
property, or in the active solicitation of a buyer. Either way,
the investor gets to keep more of his or her money, for the real
objective, buying and selling.

Fueling the mortgage product market are the low interest rates,
and the rising Real Estate prices. For many of the lending
institutions, these investment properties are a fairly safe bet.
Most of the investment property is in a resort or vacation area,
and as the numbers go, these areas will only see increases in
demand, not decreases. Also available in these areas, for
investors and homeowners alike, are the jumbo, super jumbo, and
125 mortgage options. The jumbo and super jumbo require much
more paperwork, normally a higher interest rate, and higher
private mortgage insurance; but they also provide the huge
amount needed to finance resort property during the construction
phase.

The other great contributor to the Real Estate investment market
is the coming of age for the baby boomers. Many of these
individuals are reaching retirement age, and they have
expendable, investment income. They prefer a safe bet, also.
They prefer resort, retirement, and vacation properties, also. A
great many of these individuals are investment savvy, and
understand the different loan products available, and how to use
them to their advantage.

It would be wonderful if the market continued to grow, and we
continued to experience the wonderful effects of an
ever-increasing and growing Real Estate market, but I’m afraid
we are going to hit a few years, in a few short years, that will
see a leveling, if not decline in Real Estate prices, simply as
a result of the continued climb of these last few years.

However, for the investor today, the Real Estate market is a
wonderful and exciting market on the move and on the rise. Take
the time to seek financial advice, and in some cases legal
counsel prior to jumping into the water; the need to prepare is
just as necessary for investing as it is for average home
ownership. The only black mark on this market would come from
the volatility of Real Estate, in relation to the stock market,
and the investor’s cash assets. If we should begin to experience
problems in the stock market with heavy fluctuation, or
spiraling portfolio balances, you could possibly see an effect
on the Real Estate investing market. But, just like many other
disasters, even though the possibility exists, our current
market trends and projections do not lend credit to this
potential threat. For the most part, the investment portfolio
that includes Real Estate and the mortgage market seems to be
climbing steadily!

About the author:

Tony Robinson is a Real Estate Investor, Webmaster and
International Author. Visit mortgage.com/">http://www.ezy-mortgage.com/ for his
tips on mortgages.