Author Topic: are mortgage intrest rate higher for investment property  (Read 922 times)

Mrwannabemmm

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are mortgage intrest rate higher for investment property
« on: October 13, 2015, 01:26:53 PM »

I was planning to pay off mortgage on my primary home and then pay some down payment to get a rental property. My question is if the mortgage rates are higher on rental , is it better to keep mortgage on first and use the money instead to buy a rental ?

I just want to keep things simple by paying off my primary mortgage before I start investing.

hay_otsuka

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Re: are mortgage intrest rate higher for investment property
« Reply #1 on: October 13, 2015, 01:30:33 PM »
Investment loan are around 1% over OO

Bearded Man

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Re: are mortgage intrest rate higher for investment property
« Reply #2 on: October 13, 2015, 04:01:47 PM »
Investment loan are around 1% over OO

That's what I've seen as well. If you don't mind moving, and have it down to a science like I do, you can also occupy the property then turn it into a rental after a year or two. I will be living in my current home for another year before I turn it into a rental, so total of 2 years. Largely because I have not found another home to buy yet, but also because I may sell this one due to the fact that it is in an HOA, so I don't want to have to move back into it if there is a problem with the HOA and they ban rentals, which they can do by law in WA. NEVER buy a house with an HOA. NEVER. EVER.

Also, it is my understanding you can buy the interest rate down, even on a rental property, and depreciate the extra points paid over a number of years. Food for thought. The government wants you to own property and they give very generous ways to make it work for you.

jooles

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Re: are mortgage intrest rate higher for investment property
« Reply #3 on: October 13, 2015, 04:06:03 PM »
yes.  the risk of a borrower defaulting on an investment property is higher so the bank passes the cost of that risk along to you.  interest rates and sometimes loan origination fees too are higher on any non-owner occupied loan.