Can I get a mortgage on an investment home after purchase?
I’m looking at purchasing an investment home, and it is a short sale which specifies a cash transaction. I plan to pay cash for the property.
I would like to have a mortgage on the property to use the cash for other purchases.
Is it possible to get a conventional mortgage on a property after purchase (I suspect yes), and are the terms generally the same? Is there any major disadvantage to getting a mortgage on a property after purchase?
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Yes.
Most people need the loan to be able to purchase the property, and hence arrange for the loan before they settle the purchase.
But, if you have a property free and clear (ie no loan or other encumbrance) there is nothing to stop you from taking out a loan using the property as collateral.
The only disadvantage of taking out a mortgage on a property that doesn’t have one is that you have to pay the interest. That said, a friend of mine has a number of commercial properties. Every so often, when he needs cash, he simply ups the mortgage on one of his properties – no income tax!
I have known people to arrange the financing to close on the following day they make the original purchase. The major difference between the mortgage on the investment house will be the higher interest rate and higher insurance costs associated with non owner occupied property.