When it comes to the best and surest means to generate prosperity and wealth for you and your loved ones, real estate investment certainly ranks near the top. However, recent downturns has made a lot of people reconsider jumping into investing which is the problem with the real estate market. The housing market crash took place because banks were over eager to loan money and gave out loans to many people that should not have been given financing due to poor credit or low income. The standard loans given at this time were sub-prime loans such as ARMs and Adjustable Rate Mortgages. This means that after a specified time period, usually 3 to 5 years, the interest rate on the loan would change to whatever the current country-wide interest rate was. Since it was higher during that time, this resulted in higher monthly payments. Over time this triggered many foreclosures.
What many people may not realize is that right now is a terrific time to acquire property, whether to reside in or to use as an investment. Due to historically low home values, you may never see prices like these again. For anyone who is financially able and before the market experiences an upswing and residential prices rise, you should consider getting into real estate investing. Should you choose to invest, here are several things you should keep in mind.
Always attempt to obtain a fixed mortgage. People getting mortgages that didn't have a fixed interest rate contributed significantly to the housing market crash. When you get a fixed rate mortgage, during the entire duration of the mortgage, the interest rate for your home loan will not change. This makes budget planning easier as a fixed rate means no unexpected jumps in your monthly obligations.
Try to put a minimum of 20% down. This has been the magic number for loans forever. You can avoid paying mortgage insurance every month if you hit twenty percent. This factor also led to the housing crisis. People didn't put down 20% and thus they had higher rates of interest and higher monthly installments. A 20% down payment will lower your monthly payment and will probably lower the interest rate you receive on your loans.
The idea that dream houses exist is simply not true. The pool of homes you will have to choose from will decrease and the price you have to pay for the house will rise if you will only consider purchasing a house that fits every one of your requirements. If you get too much house, you will likely be putting yourself in a position where you are paying too much every month. Too much space is not the only consequence of too much house. All of the extras are included in this as well.

If you are getting an investment property, you always need to be mindful of your cash flow. This pertains to the amount of money coming in from an investment property as a result of rentals and the amount of money going out because of mortgage payments, maintenance, along with other fees. If you have negative cash flow, you most likely shouldn't have made the deal. What you're looking for is a positive cash flow because that means you have money coming in.