Discovering YOU Magazine April 2018 Issue - Page 18

BUSINESS CENT$

Credit Tips for Buying

an Investment Property

Written by Vintage Score Solutions

(BPT) - If you love the idea of being a landlord, and don't mind being on duty around the clock, buying an investment property may be the wealth-building option for you. Property values have enjoyed a steady increase over the decades. That's why real estate has earned its reputation as a sound investment that builds wealth and credit. Most people, however, don't have the quantity of cash on hand to purchase a house or apartment building outright. Still, if becoming a landlord means taking out a 30-year mortgage, the monthly payments from the tenants should be enough to service the loan and build equity for you, while leaving some cash flow so you can maintain the property. If buying investment property sounds like a step you'd like to take, here are some credit considerations every investor needs to know.

1. Be mindful of the inquiry stage.

Once you decide to purchase an investment property, it's important to do everything you can to make sure your credit score stays as high as possible until the loan is approved and signed. Your goal is to land the best possible interest rate, because even half a percentage point can add tens of thousands of dollars of total interest payments to a 30-year loan (and affect your wealth-building abilities).

During this time, things like continuing to make on-time payments on your existing loans can be helpful in maintaining your credit score. However, sometimes people unintentionally lower their credit score when they're actually trying to be fiscally responsible. For example, when shopping around for the best mortgage rate, keep in mind that multiple inquiries can have a negative effect on your credit score, especially if you don't have a long credit history. Fortunately, many credit bureaus recognize that you may be comparison shopping, so make sure you do this within a defined time frame of 30-45 days.

".... many credit bureaus recognize that you

may be comparison shopping, ...."