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When going through a divorce, an important financial decision that many couples have to face is whether one spouse may have to take over the mortgage of a shared home (referred to as mortgage assumption) or refinancing after a divorce. This decision will depend on the mortgage terms and each spouse’s individual financial situation. A […]

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","

A financial advisor can also help you create a financial plan that addresses your needs during and after a divorce.

","

What Is a Mortgage Assumption?

","

A mortgage assumption is when one spouse takes over the existing mortgage in their name, and assumes full responsibility for the loan’s payments and terms. The original loan terms remain intact, including the interest rate, which can be beneficial depending on current mortgage rates. However, not all mortgages are assumable, and the lender must approve it after performing a credit check and income verification.

","

What Is Refinancing?

","

Refinancing your mortgage is a common choice when the original loan is not assumable or when new loan terms are more favorable. When you refinance after a divorce, either you or your ex will apply for a new loan with new terms, which can include a different interest rate, loan length and payment structure. Refinancing may also come with closing costs and fees, and the spouse applying for the refinance must qualify for the new loan based on their individual financial profile.

","

Mortgage Assumption vs. Refinancing Key Differences

","

Understanding the key differences between mortgage assumption and refinancing is important during a divorce, as it can impact how you manage the property and finances after the separation. Here are five key differences:

","$3f","

Alternatives to Mortgage Assumption and Refinancing

","

","

Here are three general alternatives to consider when going through a divorce:

","$40","

Mortgage Assumption vs. Refinancing: Which Is Best for You?

","

Consider your financial capability. If you cannot qualify for a refinance on your own, assuming the mortgage may be your only option. Refinancing may be a better choice if you can lock in a lower interest rate.

","

You should also think about the home’s equity. If there is significant equity in the property, a buyout may be necessary to compensate the spouse relinquishing ownership. Refinancing could also help access some of that equity, which may be useful during divorce negotiations.

","

Emotional attachment is another factor. If one spouse wants to keep the home for personal reasons, either option can allow the other spouse to be removed from the mortgage without selling the property.

","

Finally, consider your creditworthiness too, as refinancing requires strong credit. If your credit has been impacted, assuming the mortgage with the original terms may be easier, but make sure you can handle the payments on your own.

","

Bottom Line

","

","

Choosing between mortgage assumption and refinancing during a divorce requires careful evaluation of your financial situation, mortgage terms and long-term goals. Mortgage assumption lets you keep the existing loan, while refinancing allows you to start fresh. Alternatives like buyouts or selling the home may offer more flexibility if neither option is suitable.

","

Financial Planning Tips

","$41","

Photo credit: ©iStock.com/AndreyPopov, ©iStock.com/Jacob Wackerhausen, ©iStock.com/Prostock-Studio

"],"experts":{"name":"Michele Lerner","topic":"Home Buying","bio":"An award-winning writer with more than two decades of experience in real estate.","imageUrl":"https://d31s10tn3clc14.cloudfront.net/imgs/michele-lerner.png","email":"mlerner@smartasset.com"},"link":"/mortgage/mortgage-assumption-vs-refinance-after-divorce","published":{"datetime":"2024-9-19","readable":"September 19, 2024"},"shareInfo":{"title":"Mortgage Assumption vs. Refinancing After a Divorce","origin":"/mortgage/mortgage-assumption-vs-refinance-after-divorce"},"isNewsArticle":true},{"id":"cG9zdDoyNTY4NjM=","databaseId":256863,"postId":256863,"author":{"node":{"id":"dXNlcjoz","databaseId":3,"userId":3,"avatar":{"url":"https://secure.gravatar.com/avatar/47938df052bf0a5283bd6b77ab786737?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"SmartAsset employs a team of writers and editors with years of experience in the editorial, news and personal finance industries. Some staff members also hold the Certified Educator in Personal Finance (CEPF®) designation from the Institute for Financial Literacy.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Michael","fullName":"SmartAsset Team","lastName":"Carvin","name":"SmartAsset Team","postCount":{"pageInfo":{"offsetPagination":{"total":1417,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"mcarvin","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybToxOTkwNA==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":19904,"categoryId":19904,"link":"https://smartasset.com/real-estate-investing/articles","name":"Real Estate Investing","postCount":{"pageInfo":{"offsetPagination":{"total":61,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"real-estate-investing","ancestors":{"nodes":[{"name":"Mortgage","slug":"mortgage","__typename":"Category"}],"__typename":"CategoryToAncestorsCategoryConnection"},"parent":{"node":{"name":"Mortgage","id":"dGVybTo4Ng==","slug":"mortgage","__typename":"Category"},"__typename":"CategoryToParentCategoryConnectionEdge"},"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$42","date":"2024-07-26T14:25:27","excerpt":"

Commercial real estate offers many investment opportunities, from office buildings to retail spaces, industrial properties and multifamily apartments, as well as specialized properties like hotels. Each investment has specific benefits and drawbacks, so knowing the differences can help you make informed decisions. If you’re interested in investing in commercial real estate, a financial advisor can […]

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","

1. Office Buildings

","

Office buildings are one of the most popular types of commercial real estate investment and can range from skyscrapers in urban centers to suburban business parks. Investing in office buildings can offer you steady income by leasing to various businesses, from small firms to large corporations. These properties are categorized into three classes:

","

Class A: Top-tier buildings that are often newly constructed or extensively renovated, featuring prime locations, high-end finishes, and modern amenities.
Class B: These buildings are a step down, typically older but well-maintained, offering functional space at a more affordable price.
Class C: Older buildings, often needing renovation, and located in less desirable areas, representing higher risk but potential for significant value-add opportunities through improvements.

","

2. Retail

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Retail real estate investments encompass properties where businesses sell goods and services directly to consumers. Retail spaces often attract high foot traffic and visibility, which can drive consistent rental income. Investors typically evaluate factors like location, tenant mix and lease terms to gauge the potential profitability of retail investments. Types of retail properties include:

","

Shopping centers: Large complexes with multiple stores, including anchor tenants like supermarkets.
Standalone retail stores: Single-use buildings for one retail business, often seen in prominent locations.
Restaurants: Restaurants can attract consistent foot traffic, enhancing the property’s overall value.
Strip malls: Smaller clusters of retail stores, typically without major anchor tenants.
Outlet centers: Shopping centers with brand-name retailers offering discounted prices.
Regional malls: Large indoor shopping malls featuring a variety of stores, entertainment options, and food courts.

","

3. Industrial

","

Industrial properties make up a significant segment of commercial real estate investments. These properties cater to manufacturing, storage and distribution businesses. There are several types serving specific business needs:

","

Warehouse/distribution centers: These facilities store goods and materials before they are shipped to retailers or directly to consumers.
Manufacturing buildings: These structures are equipped for the production and assembly of goods. They often feature specialized equipment and ample space for operations.
Research and development (R&D) facilities: These properties are designed for companies focusing on innovation, offering lab spaces, offices, and light manufacturing areas.

","

4. Multifamily Residential

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Multifamily residential properties include apartment complexes, townhouses and condominiums that house multiple families or individuals. Investors are often attracted to this type of investment due to the potential for steady rental income and scalability. Additionally, multifamily properties can also increase in value through renovations and property management improvements. Finally, financing options can be more favorable, reflecting the stability and demand within this sector.

","

5. Hotels

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These properties include a wide range of establishments, from luxury resorts to budget-friendly motels. Investors can benefit from multiple revenue streams, including room rentals, event hosting and on-site amenities such as restaurants and spas.

","

The performance of hotel investments is often tied to tourism trends, economic conditions and business travel, making market research and location analysis critical. Additionally, hotel investments typically require active management and operational expertise to maximize profitability and maintain high occupancy rates.

","

6. Special Purpose

","

Special purpose properties are a unique type of commercial real estate investment, typically designed for a specific use that isn’t easily repurposed. These properties include structures like amusement parks, stadiums, schools and airports. Investors in special purpose properties can benefit from long-term leases and stable tenants due to the specialized nature of the facilities.

","

However, the niche use can make these properties harder to re-market if the original tenant vacates. As a result, thorough market research and understanding of the property’s specific industry are important for potential investors.

","

7. Mixed-Use Developments

","

Mixed-use developments combine residential, commercial, and sometimes industrial spaces within a single project. These investments create vibrant, self-contained communities where residents can live, work, and shop without extensive commuting. Typically, a mixed-use property might include apartments or condos, retail stores, restaurants, and office spaces.

","

The blend of different property types within one location can lead to diversified income streams, reducing the risk for investors. Additionally, these developments often benefit from increased demand due to their convenience and the trend toward urban living. Investing in mixed-use developments can offer a dynamic and potentially lucrative opportunity in the commercial real estate market.

","

8. Land

","

Land can be developed into commercial uses, such as retail centers, office buildings or industrial parks. Investors often purchase land with the intent of either developing it themselves or selling it to developers at a profit. The value of land can appreciate over time, especially in areas experiencing growth and development.

","

Additionally, land investments typically involve lower maintenance costs when compared with developed properties. However, investors should consider factors such as zoning laws, environmental regulations, and the overall market demand for the type of development envisioned.

","

Bottom Line

","

","

Commercial real estate encompasses a wide range of investment opportunities that can diversify and help your investment portfolio grow. Before you buy commercial real estate, however, you should research the different types available and make sure you compare the benefits and drawbacks for your portfolio.

","

Real Estate Investment Tips

","$54","

Photo credit: ©iStock.com/katleho Seisa, ©iStock.com/FreshSplash

"],"experts":null,"link":"/real-estate-investing/different-types-of-commercial-real-estate","published":{"datetime":"2024-7-26","readable":"July 26, 2024"},"shareInfo":{"title":"8 Types of Commercial Real Estate Investments","origin":"/mortgage/different-types-of-commercial-real-estate"},"isNewsArticle":false},{"id":"cG9zdDoyMDQ3MTU=","databaseId":204715,"postId":204715,"author":{"node":{"id":"dXNlcjoyOA==","databaseId":28,"userId":28,"avatar":{"url":"https://secure.gravatar.com/avatar/c2129e3c852ac8063af4562fe9605e22?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She's worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children. Rebecca also holds the Certified Educator in Personal Finance (CEPF®) designation.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Rebecca","fullName":"Rebecca Lake, CEPF®","lastName":"Lake, CEPF®","name":"Rebecca Lake, CEPF®","postCount":{"pageInfo":{"offsetPagination":{"total":1252,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"rlake","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybToxOTkwNA==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":19904,"categoryId":19904,"link":"https://smartasset.com/real-estate-investing/articles","name":"Real Estate Investing","postCount":{"pageInfo":{"offsetPagination":{"total":61,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"real-estate-investing","ancestors":{"nodes":[{"name":"Mortgage","slug":"mortgage","__typename":"Category"}],"__typename":"CategoryToAncestorsCategoryConnection"},"parent":{"node":{"name":"Mortgage","id":"dGVybTo4Ng==","slug":"mortgage","__typename":"Category"},"__typename":"CategoryToParentCategoryConnectionEdge"},"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$55","date":"2023-07-26T10:41:41","excerpt":"

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Real estate investments can diversify a portfolio, but managing properties can be time-consuming. You might prefer to invest in real estate online as an alternative to owning property directly. Some of the options for online real estate investing include crowdfunding, real estate investment trusts (REIT) and real estate exchange-traded funds (ETFs). Each one can offer advantages to investors who are ready to venture into real estate. Talking to a financial advisor can help you develop an investment strategy that’s tailored to your goals.

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Why Invest in Real Estate Online?

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Real estate is a unique asset class, as it tends to fare well during periods of high inflation and, in some instances, recessions. When consumer prices rise, rental rates tend to follow suit. Meanwhile, certain types of property, including multi-family homes, student housing and farmland, can remain profitable during economic downturns.

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Owning real estate also lends some tax advantages in the form of deductions for eligible expenses and deferral of capital gains tax. There’s a trade-off, however, since owning rental properties or investing in fix-and-flip properties typically requires investors to be hands-on to some degree.

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Investing in real estate online might appeal to investors who want to forego direct property ownership. Here are some of the benefits of online real estate investing:

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Potential for above-average returns
Lower points of entry
No need to borrow
Diversification and protection against inflation
Ability to spread funds over multiple property investments
Access to a broad range of property types

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Online real estate investing still involves risk and it may not be suitable for every investor. However, there are some good reasons to consider investing in real estate online as an alternative to purchasing a rental property or becoming a house flipper. If you’re interested in online real estate investing, the next step is deciding how you’d like to do it.

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Online Investing With Real Estate Crowdfunding

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Real estate crowdfunding platforms allow multiple investors to pool their money together to fund property investments. There are numerous crowdfunding platforms that offer access to real estate. Some of the most recognizable names include CrowdStreet, RealtyMogul and Fundrise.

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Each platform has its own rules and requirements for who can invest and what types of property investments you can make. Some crowdfunding platforms limit access to accredited investors only, while others allow anyone to invest. To qualify as an accredited investor, you must:

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Have a net worth exceeding $1 million, excluding your primary residence OR
Have more than $200,000 in earned income for the past two calendar years ($300,000 for married couples) with the expectation of the same earnings in future years

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Financial professionals can also be categorized as accredited investors if they hold a Series 7, 65 or 82 license.

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In terms of the kinds of real estate investments offered, it depends on the platform you’re using. Some crowdfunding platforms specialize in a particular niche, such as self-storage properties or apartment buildings. Others might offer access to a varied mix of investments that can include office buildings, multi-family homes and retail space.

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There’s typically a minimum investment requirement which may range anywhere from $1,000 to $100,000 or more. Lower minimums can make crowdfunding attractive to investors who don’t have thousands of tens of thousands of dollars to sink into a single deal.

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When comparing crowdfunding platforms, it’s helpful to consider the range of investments offered, the minimum investment for each one and the projected return. It’s also important to weigh up the fees that you’ll pay and the holding period of each investment, as real estate crowdfunding can be fairly illiquid.

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Use REITs to Invest in Real Estate Online

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Real estate investment trusts (REITs) are another option for investing in real estate online. REITs are legal entities that own income-producing properties, such as warehouses, retail space or multi-family housing. Publicly traded REITs are available to any investor, while private REITs are accessible to accredited investors.

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What’s the benefit of investing in REITs? Passive income is the answer. REITs are required to pay out 90% of taxable profits to their shareholders as dividends. Investors get the income benefits of real estate without the headaches that go along with owning property.

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The criteria for choosing REITs to invest in are similar to choosing a real estate crowdfunding platform. It’s helpful to look at what the REIT invests in, how much of a dividend it typically pays out to shareholders and any fees you might pay to invest. You may also want to consider how easily you’ll be able to sell your shares should you decide to move on from a REIT investment, as some are more liquid than others.

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Consider Real Estate ETFs

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Exchange-traded funds are mutual funds that trade on an exchange like a stock. ETFs can offer access to a basket of investments, including real estate, allowing for easier diversification. You can “own” multiple property types through a single ETF versus having to tie money up into individual properties.

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Investing in real estate with ETFs has some advantages, as they tend to be more tax-efficient than other types of mutual funds. You may pay lower expense ratios as well, depending on which fund you’re investing in.

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When comparing real estate ETFs, it’s a good idea to start with the investments themselves. Specifically, consider the type of properties you’ll have access to, what kind of returns those properties are likely to generate and the associated risks of each one. You’ll also want to look at the minimum investment required and the fund’s fees.

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What’s the Best Way to Invest in Real Estate Online?

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The best approach for online real estate investing can depend on several factors, including the types of properties you’re interested in, the amount you have available to invest, your risk tolerance and your preferred timeline for making an exit from property investments.

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Real estate crowdfunding is notable for making deals that would ordinarily be the domain of higher-net-worth investors available to a broader audience. As mentioned, it’s possible to find investments with relatively low entry points. The trade-off, however, is that crowdfunding tends to require a longer holding period, which may last anywhere from three to 10 years.

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REITs, on the other hand, might be suited to investors who are looking to collect steady income from dividends. Again, liquidity is a key concern as some REITs may be easier to sell than others. Real estate ETFs, meanwhile, may offer the highest level of liquidity with the lowest overall cost, though it’s important to consider the kind of returns you might be able to generate.

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Bottom Line

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Investing in real estate can help you to balance risk in your portfolio while creating an inflationary hedge. Should you decide to invest in real estate online, there are several possibilities for doing so. Considering your goals and risk tolerance can help you to decide which one might be right for you.

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Mortgage Tips

","$62","

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Buying a home is a major milestone. Therefore, deciding on how you should pay for it will also have important long-term consequences. If you can buy your home in cash, you could avoid unnecessary debt. But, taking out a mortgage can also free up your cash to invest in other things. Let’s take a look […]

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A financial advisor can provide you with resources and expertise to help you make smart home buying decisions.

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What to Consider When Paying for a Home

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There are many differences between using cash to buy a home or taking out a mortgage. Here are some pros and cons to help you make a decision:

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The Benefits of an All-Cash Offer

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Buying a house in cash comes with several advantages. Primarily, an all-cash deal eliminates the need for interest payments, which can add a significant cost over the life of your mortgage.

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A cash purchase can also expedite the closing process, as there’s no need for lender approval. And this can make your offer more compelling in a competitive market.

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The Downsides of an All-Cash Offer

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When putting your cash upfront, you should make sure to have enough liquidity to pay for additional expenses that you will incur as a homeowner.

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Additionally, having less cash also means that you will be limited when it comes to making other investments. And, putting all that money into one home also means that you will be tying it to one asset.

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Finally, you won’t be able to take a reverse mortgage on the equity of your home if the value goes up.

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The Benefits of Getting a Mortgage

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Getting a mortgage will free up your money for other investments. When managed effectively, this strategy can result in greater wealth accumulation.

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Moreover, consistently meeting mortgage payments can also help you establish a solid credit history for other financial endeavors.

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And, finally, a mortgage can also get you certain tax benefits and protect you from creditors.

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The Downsides of Getting a Mortgage

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Mortgages carry interest and closing costs. And, if your down payment is under 20%, you may also be required to pay mortgage insurance, which can drive up your interest rate even further.

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You should also note that since a mortgage is a long-term commitment, you could be locked into a payback period that lasts decades. And, as a secured loan, you can end up losing your home and damaging your credit if you fall behind on payments.

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Bottom Line

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Whether you pay in cash or get a mortgage will depend on your finances and your tolerance for risk. Paying off your home entirely in cash will leave you debt-free. But this will also tie a chunk of your money into one asset and you could miss out on gaining higher net worth through other strategic investments. On the other hand, mortgages cost more, but could help you free up cash to diversify your investments and provide tax benefits.

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Tips for Home buyers

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