are interest only mortgages better? stated income stated asset? 30 year fixed. please provide opinions based on why some are better than other and which ones you currently have in place.
What type of mortgage is the best for investment property particularly condo and single family rentals?
25
Mar
J. Philip Real Estate
March 25, 2010 at 6:59 am
I’d go with a 30 year fixed because an adjustable does not give you cost certainty.
Interest-only is a gimmick I’d avoid, because you don’t knock any principle down with each payment. You want a loan that amortizes. The whole point of investing in real estate in the long term is to have the rent retire the debt over the years so that you have a paid-for asset down the line.
Stated income and stated asset aren’t as advantageous as full documentation because they have higher rates, which adversely affects your cash flow.
In short, you want a fixed rate loan which pays the principle down monthly and no gimmicks. If you have to state you assets or income, or need interest-only for cash flow, it probably isn’t the right time to buy yet.
Doctor Deth
March 25, 2010 at 7:13 am
interest only mortgages are very dangerous – and with investment property – you will typically need at least 10-20% down payment – you may not have any choice on type of mortgages – banks will be a lot stricter on types of loans and terms going forward