Since CD interest rates are so low we were thinking of securing a mortgage with one to buy rental property-the cd would still earn interest, and (hopefully) the rent would pay for the mortgage.
We have someone knowledgeable about property who could manage it for us, but I have qualms about people who don't pay their rent/and or destroy property.
Any suggestions?Taking out a mortgage on a rental property secured by a certificate of deposit?
You will not find a lender willing to take the CD as collateral. The mortgage is secured by the property, itself. You need a greater downpayment for a non-owner occupied rental property, and the interest rate is higher on a mortgage for a rental property, if you don't live in it. A Lender is not going to allow you to use the CD as collateral, and then dip into the proceeds if the unit is vacant. It just doesn't work that way. Additionally, you must budget money for inspections, settlement costs such as insurance and title insurance, repairs, and to pay the mortgage when the unit is empty. No unit is rented all of the time. Talk to a reputable mortgage broker to see what you qualify for-- once you have been qualified by the mortgage broker, you can call a realtor and find a property. After you buy a property, you must pull credit on your tenants, and confirm they are working. It is not hard to find good tenants, but it sure is easy to get stuck with a bad one. Some states are very pro-tenant, and it is hard to evict --can be a long and expensive process. I hope this explanation helps.Taking out a mortgage on a rental property secured by a certificate of deposit?
property is your best bet
goes up in value more then a cd
but right now i would not do it econome is bad
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