Most people who have never gotten into real estate investments don’t quite understand how it all works. For the most part, they have a lot of problems thinking about the financing aspects of it all. Most people are scared of, or intimidated about, getting in to real estate investments because they don’t have the money on hand to purchase a property and they don’t know where they are going to get that money. Yet, the truth of the matter is pretty much no one out there has the cash on hand to purchase a property (even seasoned real estate investors) and pretty much no one pays their own money upfront for their properties. Most money for these investments comes from the same place that most money for any kind of real estate purchase comes from- the bank in the form of a mortgage. And like any other kind of mortgage, it’s crucially important that you get the lowest interest rate possible.
Getting a low interest rate is important no matter what reason you are borrowing money for, but it is especially important when it comes to real estate investments. The reason is simple- you want to have positive cash flow that provides the largest amount of profit as possible from your investment. That profit is only figured out after you take what you earn from the property and subtract the mortgage and other expenses. The lower your monthly mortgage payments, the greater the profits you will earn from your investments. It’s extremely simple, and the key to lower monthly payments involves getting the best interest rate possible.
To get the lowest interest rates possible, you need to do your research. You need to shop around and look at all the lenders available to you who want to provide you with money, and you need to compare the different rates that they offer you. It helps to even pit them against each other and try and get everyone to lower the rate that they are offering you to get your business. In general you will get a lower interest rate when you are looking for money for an investment property (as they are seen as lower risk loans) but you still want to get the rate as low as possible.
One way to get a lower interest rate is to borrow a larger sum than you originally went looking for. There are a lot of banks and lenders out there who offer you a lower interest rate when they offer you more money because it works out in their favor in the long term, but is still better for you in the short term.
Of course, you need to look at the life of the loan to decide whether or not it is actually worthwhile. Figuring out what you will ultimately pay on a loan over the entire length of the loan is an incredibly intelligent thing to do, and something that often matters more than the monthly mortgage payment. You need to decide, sometimes, whether you want to pay less monthly or pay less as a whole.