Investment property mortgages have higher interest rates than owner-occupied properties, but it’s still worth shopping around for the best deal. Gather property information and contact at least three lenders to compare rates, APR, and closing costs. Look at the APR rather than just the interest rate to determine the true cost of the loan. Choose the mortgage that fits your budget best.
An investment property or rental property mortgage typically carries a higher interest rate than a mortgage on an owner-occupied property, such as a main home. Despite this, it’s still worth shopping to find the lowest real estate interest rates. The best way to find the best deal possible is to shop around and compare your options and know what to look for.
First, gather all of your property information so you have it in front of you when you contact lenders. Useful information includes the approximate value of the property, the type of property (single-family, condominium, two-family or four-bedroom, etc.), the estimated current mortgage balance, and the current interest rate, if it’s a refinance. Once you have this information, you can start contacting mortgage lenders.
Contact at least three mortgage lenders to gather information about creating a new investment property loan or refinancing an existing one. Let the representative know ahead of time that this is investment property and what type of property it is. They will also need the purchase price or present value of the home and any existing balance on the mortgage.
The representative will give you three pieces of information. They will provide the best investment property interest rate they can offer, annual percentage rate (APR), and estimated closing costs. You should write down all three pieces of information and, if possible, get a detailed list of closing costs.
Once you have all the information from three or more mortgage lenders, you’re ready to evaluate the information. Put the information side by side, so you can go line by line and compare options. First, make sure you’re comparing the same type of mortgage, such as a 30-year mortgage from lender A with a 30-year fixed from lender B.
Next, to find the best rate for investment property interest, it’s not the interest rate you want to look at first, consider the APR, which includes closing costs and the interest rate as a percentage to illustrate the true cost. for you for the establishment of the loan. Even in a situation where the interest rate is higher, but the APR is lower, this mortgage will cost you less in the long run than a mortgage with a lower interest rate.
The interest rate itself is the rate used to calculate the monthly payments you are responsible for making. While your goal should be to save money in the long run, if a mortgage with a higher APR but lower interest rate fits your budget better, then this is the best investment property interest rate for your financial situation.
Smart Asset.
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