After the pandemic, the San Antonio real estate market is on the upswing again. The question is: should you get in on the action?
Chances are, the answer is yes. Investing in real estate comes with many financial benefits, including:
- Home appreciation
- Increased cash flow
- Tax benefits
Before you can start creating wealth, however, you'll need to take care of your real estate financing. Choosing the right financing option can be the difference between a successful venture and a missed opportunity.
Not sure where to turn for financing? Read on to learn more about your main options and why they may make sense for you!
Conventional Loan
A conventional loan is any loan not guaranteed by the government. The typical expectation for a down payment is 20%, though some lenders will accept less. This often comes down to your credit history.
One key advantage of conventional real estate loans lies in their low interest rates. They also offer long repayment periods, usually 15-30 years. This makes conventional loans a good fit for most San Antonio homes.
Commercial Loan
Commercial loans are a common part of financing strategies used for large-scale real estate projects. Some common examples include:
- Multi-unit apartment buildings
- Mixed-use developments
- Office buildings
Due to their intended use, these loans come with higher borrowing limits. As a result, it's also harder to qualify for them. You'll likely need extensive documentation, as well as a large down payment.
Private Money Loan
As far as property financing tips go, it's always a good idea to consider private money loans. These loans are from one individual to another. Their terms can vary wildly depending on your relationship with the lender.
One big advantage of private loans is that they're less stringent than other options. This can be important if you have subpar credit in a strong market. However, they come with high interest rates and fees.
Hard Money Loan
Hard money loans are ideal for short-term real estate investment. Many investors use them to finance a house flip. Most lenders will gauge whether you can repay the loan by looking at the home's after-repair value.
These loans tend to be faster and easier to qualify for than most other options. However, interest rates are higher, usually ranging between 10% and 18%. Your repayment period will be shorter as well.
Tapping Home Equity
When it comes to mortgage options, you can always draw on your home equity. You can make this happen via:
- Home equity loan
- Cash-out refinance
- Home equity line of credit (HELOC)
This method allows you to borrow up to 80% of your home's equity value. In some cases, this may be enough capital for the full purchase of a property. The clear downside is that you'll be putting your primary home at risk.
Real Estate Financing Made Easy
There's no denying it: investing in real estate is inherently risky. Still, picking a good real estate financing option makes the risk far more manageable.
Looking to invest in San Antonio real estate? At PMI Navigate, our real estate experts will help you find the perfect property for your needs! Start by using our mortgage calculator to find out how much you can afford to borrow!
