What Types of Investment Property Loans are Available in Phoenix, AZ?
Channel: Service Star Realty
Date: 11/02/2019

https://www.leaseaz.com/blog/types-of-investment-property-loans


There are many different types of mortgages for an investment property. Using other peoples’ money is a great vehicle in real estate investing ( https://www.leaseaz.com/blog/how-to-get-started-in-real-estate-investing-phoenix-rental-property-investment-advice ) that helps you maximize the return on your investment. There are a few types of loans available in the marketplace today, and we want you to understand how they work.

Types of Investment Home Loans

The most common mortgage is a 30-year fixed rate conventional loan. There is also a 15-year conventional loan that comes with lower interest rates but higher monthly payments, and there are interest only loans with much lower payments but there is usually a five or seven year call on them. 

Seller financing is also available, and that’s usually interest-only. Sometimes, loans can be found with negative amortization. This means you are making payments on the loan, but the amount you owe is still going up because you are not paying enough to cover the interest. This is the type of loan that contributed to the real estate bubble which created a number of upside down mortgages. Therefore, it’s not really available anymore.

Maybe you are buying a particular property and the cash flow ( https://www.leaseaz.com/blog/cash-flow-101-key-differentiators-of-positive-and-negative-cash-flow-on-phoenix-rental-properties ) would be negative in an amortized loan, but the interest-only payments will help you break even. You will only hold the property for two or three years, so the interest-only loan with a balloon payment would work. If you know you will be holding onto a property for 10 to 30 years as part of your long term tax saving retirement plan, you need to look at a fixed rate loan which gives you a lot more options. 

To learn more, go to: https://www.leaseaz.com/blog/types-of-investment-property-loans

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