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A rental property is a wonderful investment option to consider, and it can provide you with everything from considerable tax benefits to appreciation and monthly cash flow. While you may be eager to get started searching for a new rental property to invest in, a good idea is to take the initial step to get pre-approved for your mortgage.
There are several good reasons why a pre-approval is an important first step to take.
The mortgage rules and guidelines for an investment or non-owner occupied property are different than those for an owner occupied property. For example, a key difference is that most lenders will require you to make a larger down payment.
When you get pre-approved for your mortgage, you can more easily narrow down your property choices so that you only consider those that are affordable for your budget.
Having a focused price range in mind will help you save time looking only at properties that meet your budget while also helping you avoid disappointment if you see a property that you find you you cannot afford.
When you invest in a rental property, you will need to estimate the cash flow for the property to ensure that it is a good investment. This may include reviewing the monthly rents and operating expenses, and it also includes analyzing the mortgage payment.
When you get pre-approved for your mortgage, you can estimate your monthly payment and determine which properties are a better investment opportunity for you and which will generate the largest profit for you.
This is a crucial component to consider, as you don’t want to end up with a property that is not able to cover the operating costs with the rent you’re able to collect.
By getting pre-approved, your mortgage professional will provide you with a pre-approval letter. This letter can be given to a seller when you structure your offer, and essentially this will strengthen your offer and make you look like a more serious and qualified buyer.
When you are in a bidding war, this letter can make a big difference in your success. Furthermore, it can streamline your mortgage process once your offer is accepted by the buyer, and it will enable you to create a more realistic closing date on your offer.
While you may be ready to jump head first into your property search, you may benefit from taking time to get pre-approved for your mortgage. This process takes very little time to do, and it will facilitate the entire process.
From searching for a great property and analyzing its strength as an investment opportunity to helping you pass through the loan process, you will benefit in a number of ways. You can reach out to a mortgage professional today to begin the pre-approval process.
Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We currently lend in all of Washington, Oregon, Idaho and Colorado. Since 1992, we have bee offering a variety of mortgage programs to borrowers, and we’d love to help you too. Please contact us if you have mortgage-related questions.
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