Important Things to Know About Investment Property Mortgage Rates

Congratulations – you’re thinking about becoming a landlord (said no one ever, except us)! Investment properties can provide the opportunity to build equity in a second property and improve your cash flow. If you’re in the market for a mortgage on an investment property, there are some things you need to know.

Because you’re not living there, your interest rate may be higher.

Most investment properties are non-owner-occupied, meaning you own it but it’s not your primary residence, so loans for those could be considered a higher risk because it’s easier to walk away from a property you don’t live in.

You might need to have a bigger down payment.

Again, because an investment property isn’t your main home, lenders often require a larger down payment to mitigate some of the risk associated with this type of loan. One benefit of putting down a big down payment is that your monthly payments will be lower, giving you the opportunity to earn more from rent payments.

The type of property is important.

When you’re shopping for an investment property, make sure to review all necessary homeowners’ association documents and regulations. Some places may have regulations about renting out the property, so make sure the property is eligible. Another important thing to remember is that many lenders won’t offer financing on time-shares and co-ops, so talk to a mortgage expert before you get too far down the line.

We think the decision to buy an investment property is an exciting one, so we’re here to help. If you have questions about how to finance an investment property, get in touch with us today.