Posted by QuickReadAbout.com Staff in While many people would consider a home a long- term commitment, some people buy homes to generate a profit or for other planned short- term purposes.
The rules of the game can change somewhat for people who plan to be in their homes for only a few years.
Some things that can be disadvantages for long-term investors, may work in the favor of short-term investors.
One tip to consider for short term investing is interest only loans if the home value looks to promising in significantly increasing in value.
These types of loans have very low monthly payments because you are only paying on the interest of the loan. Lets say the home doubles in value.
You can pay off the loan at the time you sell the house and still pocket a large profit.
Another tip is to check into negative mortgage points. Long- term investors pay mortgage points to reduce their long- term mortgage payments.
Short- term buyers can actually benefit from the negative mortgage points if they only plan to keep the home for a couple of years.
Why is this? Well, negative mortgage points, or rebates, can help pay some of the closing costs associated with buying a home.
This can save the short-term buyer money because they will not be affected by the higher interest rate since they will only be keeping the home for a couple of years.
The money they make off of the negative mortgage points will be more than the difference they pay with the higher interest.
A final tip is to consider a Balloon Mortgage. This type of mortgage generates lower monthly payments because the majority of the loan is collected at the end of the loans life in a lump sum.
If the borrower is planning to sell the house before then, he/she will not have to worry about trying to refinance the balloon payment but will benefit from the lower monthly payments.
These three tips are a few ways to maximize your dollars for short term homeowners.