Investment Properties

It’s not unusual for established homeowners – particularly those who’ve seen their primary residence rise in value – to consider another property for investment purposes. Real estate can be a sound part of a financial portfolio if carefully planned to align with your other investments and your near- and long-term financial goals.

If you’re ready to borrow for a residential investment property, these two tips can improve your chances of success:

1. Make a sizable down payment

Since mortgage insurance won’t cover investment properties, you’ll need to put at least 20 percent down to secure traditional financing.

2. Be a ‘strong borrower’

Although many factors — among them the loan-to-value ratio and the policies of the lender you’re dealing with — can influence the terms of a loan on an investment property, you’ll want to check your credit score before attempting a deal. A higher credit score allows for more options when obtaining a mortgage for an investment property.