Fearless Money Talk
Where candid conversations steer the course toward financial growth and fulfillment.
Thinking about purchasing a second property for rental use can be a great way to generate passive income. Here are several ways to consider funding it.
Firstly, if you've got savings tucked away, using them can be a clear-cut method. It not only saves you from debt but also spares you from those pesky interest payments.
But if you're like most, a mortgage might be your path. It's crucial for you to shop around, ensuring you get the best rates that cater specifically to your needs. There are options like adjustable-rate or interest-only mortgages, which may be viable options if they align with your property-holding plans.
A tip I generally suggest is to get pre-approved for that mortgage before diving into property hunting. It'll not only show you your borrowing limits but also position you as a serious buyer. Also, check out programs from the Federal Housing Administration (FHA) or Veterans Affairs (VA). If you qualify, these could be advantageous, particularly with down payments or if your credit score has a few blemishes.
Another option available is a hard money loan; this is a short-term loan from a private lender. They typically have higher interest rates and fees than other types of loans, but they can be a good option for borrowers who need to close on a property quickly or who have poor credit.
Remember, the best option is the one that fits your financial situation and goals. If you are unsure which option is right for you, it may be a good idea to speak with a financial advisor or mortgage lender.
Last received September 2023 based on 12/31/2022 data.
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