Choosing the Best Mortgage Rates On Investment Property

A lot of people are now using their second home as investment property. Aside from the obvious reason of additional cash flow, investment properties are stable investments because they are not as volatile compared to other forms. If you want to follow this business path, you need to be familiar with mortgage rates on investment property because you will need a mortgage to get started.

Choices for Mortgage Rates On Investment Property

There are a lot of things to consider when choosing the best mortgage. When you know your way around this, your way around your entire investment will be smooth. So what exactly are these things? Below are some of the aspects that you need to look into.

 

1. High down payment

Under normal circumstances, high down payments are required by banks to secure their investments. This is to deter you from walking away from your debt and in cases that you really do, their losses are not that huge. On the upside, you can also enjoy lower mortgage rates if you put up a huge down payment and this is advantageous in the long haul. There are investors that would offer zero down payment mortgages but they are generally considered risky for both parties. The lender would be forced to charge you higher mortgage rates to cover up for his risks and you in turn will have a hard time coping with high monthly payments.

 

2. Fixed term rate

If you have a good idea of your cash flow, fix term rate is the best option that you should get. The advantage of a fix rate is that you can avoid a lot of surprises down the road.

 

3. Rentals add back

Rentals add back are used as backup plan in your property investment and can range between 50% to 100% on regular mortgage. You can use this to qualify you for the mortgage or use this as payment method.

 

How to Find the Best Mortgage Rates On Investment Property

There is no hard and fast rule to finding the best mortgage rates on investment property. Factors like the location of your property and daily base rates play a role in determining the rate that the lender will give you. The first thing that you should do is determine how much money you’re willing to spend on your investment. The lower you are planning to spend the lower would be the rate.

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