6 Tips For Real Estate Financing By Experts
Rents are high in many cities, and lending rates are relatively low. Fix and flip get affected by seasons. According to Mortgage Executive Magazine 2019, social media ads can improve your real estate game.
These are just some of the many things you should keep in mind in the real estate business. To get to the top of the game, there is a lot to do. For your help, here are our top tips by experts for real estate financing.
#1. Check Equity
Check if you have enough equity to buy the property. You should bring 10 to 20 percent of the purchase price plus the ancillary acquisition costs (for land transfer tax, notary, and land registry entry). The more, the better, because interest rates will then be lower. You can get better deals if your income is really good and stable. Under no circumstances should you have to finance the incidental acquisition costs with a loan.
#2. Calculate The Load
Including the additional costs, the monthly charge should not exceed 40 percent of your net income. The 13th and further monthly salaries are not taken into account. If two incomes are available, you should note that one salary can be temporarily lost, for example, due to the birth of a child.
#3. Use Repayment Loans
The simplest form of loan is the best: the amortization loan. You will pay off at least 1 percent of your loan a year.
#4. Calculate Interest And Repayment
The rule of thumb for calculating the monthly charge is (nominal) interest plus 1 percent repayment over 12 months. An example: You have agreed to an interest rate of 4 percent, then add one percentage point to the repayment. 5 percent of 100,000 $ loaned amounts to 5,000 $ annually. Divided by 12 months, the loan costs 417 $ per month.
When money is available at low-interest rates in times of low-interest rates, it is worth increasing the repayment. In our example, you have now borrowed the 100,000 $ at 3 percent interest. You can estimate 2 percent for the repayment and still stay with a monthly charge of 417 $.
#5. Take Housing Benefit And Reserve Into Account
Even if you have bought your own apartment, you are not entirely free. Housing allowance is charged for waste disposal, administration costs, and so on. You must also set up a reserve for repairs. The monthly charges should be around 3 to 3.50 $ per square meter for new buildings and 3 to 4$ per square meter for old buildings.
#6. Take The Help Of A Mortgage Loan
You can also finance your new home from a mortgage loan. Many people lend money in exchange for their property. In the latest survey published in Mortgage Executive Magazine, it was found that 70 people out of 100 prefer to finance through mortgage loans rather than any other medium.
Mortgage Executive Magazine 2019 has helped many people to get good deals on mortgage loans. You can also use a Mortgage Banking Magazine to know about all the trends and things that are going on in the lending market. This will help you to get an idea of at which time you should take a mortgage loan.
So, these were the top six tips for real estate financing. If you like reading this article, then share it with all your friends looking to lend money from the market.