There is one thing that a lot of wealthy people have in common. It’s easy to think all wealthy people have a high IQ or that their parents were wealthy too. You may also be tempted to think that having a degree from one of the top schools in the country is a primary reason for their status.
Most millionaires in the United States are self-made without the highest IQ score, wealthy parents, and a fancy degree. The truth is most of them became wealthy from their real estate investments.
That’s right, by using government loans for real estate investing, a lot of millionaires built their fortune to massive amounts. Now, it’s evident that the real estate market has changed quite a bit over the years, but that doesn’t mean you can’t get in on the investing action.
Some investors are taking advantage of government loans and they are achieving new levels of success doing it. If you are wondering how to get your slice of the wealth pie too, here’s what you need to know about using government loans for real estate investing.
What Is a Government Loan for Real Estate?
Many investors use the government loan known as the FHA 203(k) loan. This loan allows investors to buy a home that they can renovate and purchase with a single mortgage. Check out this article to learn more about how you can begin real estate investing.
Pros of Using Government Loans for Real Estate Investing
There are some notable pros to using a government loan for real estate investing. The first pro is that the interest rates on these loans are typically low. Federal loans for real estate investors also tend to require little to no down payment.
In some cases, a down payment is needed, but it is as low as 3.5%. A government-backed loan also doesn’t require the highest credit score, with most lenders looking for a minimum score of 580.
Cons in Using Government Loans for Real Estate Investing
There are a few cons to consider when using government loans to buy a house as an investment. When you put down less than 20% for a home purchase, you will have to pay the PMI, or property mortgage insurance, which is added to the monthly cost of the mortgage.
Additionally, federal loans for real estate investors have an “owner-occupancy” clause. This means you have to live in the property that you purchased and use it as your primary residence for a year.
Another con includes limitations on houses available to buy based on the purchase price.
Are Government Loans for Real Estate Investing Right for You?
Investing in real estate can be lucrative if done right. That’s why it’s a good idea to consider government loans for real estate investing because they are a great tool. Regardless of whether you are a beginner or a seasoned investor, real estate can help you reach the financial goals you want to achieve.
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