Finding Downpayment Money
A big road block when it comes to real estate investing is how to come up with the down payment. Unless you’ve been saving up for a while, it’s not typical to have the money saved that banks often require. Or if you do have the money saved, usually it’s set aside for a rainy day fund or your children’s college and you might not want to touch it.
Any other options? If you’re currently a homeowner, you might have the good fortune of having a home that’s been saving for you!
Even with the current downturn of home prices, if you’ve owned your home for some time or perhaps if you got a good deal when you purchased it you might just have some equity waiting to be used. If used wisely, this equity can be used as a great investment tool. By “used wisely” I mean refinancing, which can be a good idea if you use that money to make MORE money, like using it as a down payment on an investment property.
Wanting to purchase a new jet ski is NOT a good use for the money because it depreciates in value over time and does not provide any income or any tax benefits.
Keep in mind your monthly debt obligations will be higher but, so too are your tax benefits. Remember, all mortgage interest is deductable so your increased payments will be somewhat offset at tax time. Remember to sincerely ask yourself if the money you take out is going to make you more money. If it’s not, you’re going the wrong direction!
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