Curt: We've talked before here on "South Florida Homes and Lifestyles" about getting a mortgage and all the processing and all the paperwork you have to do to get a mortgage for your primary residence. Well, what if you want a mortgage for an investment property? Well, you should talk to someone who knows, someone like Jeannine Henrion who's here from Group One Mortgage. How does it differ getting a mortgage on your personal home versus a mortgage on an investment property?
Jeannine Henrion: Well, Curt, the income and asset documentation is very similar, but when you're buying a primary residence with a conventional loan, you can put down as little as 5%. On a second home you can put down as little as 10%, and those differences are because of the appetite of the mortgage insurance providers. Mortgage insurance is required whenever you have less than 20% down. On investment property there is no mortgage insurance, so you need a minimum of 20% down, and the rate gets better if you're able to put down 25%.
Curt: Because the lender wants to be assured that it is going to be paid back.
Jeannine: Yes, so they want the borrower to have, you know, a little more skin in the game, so to speak. Another thing that's different when you're buying a primary residence, the lenders aren't necessarily as concerned with the reserves, the extra money that you have in the bank, but if you're buying investment property, then they wanna see that you have reserves of 6 months principle, interest, taxes, and insurance in the bank so that, let's just say, if you lose a tenant or things like that there's not the concern that you're gonna default because you're missing that piece of cash flow.
Curt: No hand-to-mouth problems there.
Curt: And of course, with the primary residence you have to have some place to live, so the bank is going to be--or the lender is going to be sure that you're gonna wanna live some place and probably are going to be much more likely to pay your mortgage than an investment.
Curt: What about if you're buying an investment and need a loan for an investment property for your business?
Jeannine: If you're--well, SBA really likes businesses that have real estate with them, so an SBA loan might be a good avenue for a business owner to take. They're gonna look at the borrower as a whole, the reserves, the revenue generated by that business. It's a little more complicated than just a esidential loan, but Group One has resources to take that business owner to an SBA loan if that's the right match for them as well.
Curt: Actually an SBA loan is probably really complicated, so you need somebody who can walk you through it.
Jeannine: We can take you through the steps. We have great resources.
Curt: Okay, Jeannine Henrion, good advice from Group One Mortgage.
Jeannine: Thank you, Curt.
Learn more about Jeannine Henrion, Family Mortgage (previously Group One Mortgage)
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