Investment property mortgage rates are higher than interest rates for an owner occupied home. If you’re considering buying an investment property, this is one of the things you should keep in mind as you put together your business plan and estimate your expenses.
Investment Property Mortgage Rates – Planning Your Budget
The reason for higher investment property mortgage rates is that lenders perceive an investment property to carry more risk. Your lender will be able to get into detail about whatever the current market rates are at the moment, but generally you should expect to pay around half a percentage point higher for an investment property mortgage rate.
Another thing to keep in mind is that home loans for investment properties generally require a 20% down payment, unlike a home that you plan on occupying. However, the good news is that after you can show that your investment property is generating income in the form of rent from a tenant, etc. your lender will stop counting your investment property mortgage as debt in your debt-to-income ratio. This is how people get loans for multiple investment properties –they just save the money for a down payment and buy the next one.
Have you thought about buying an investment property in Northern Virginia? This area provides a level of stability and property value appreciation that is hard to find in other real estate markets. Call me at 703-462-0700 or email me at DarrenRobertsonHomes@gmail.com for a list of the top 5 mistakes that Northern Virginia real estate investors make.