How much higher are mortgage rates for investment properties? The answer depends upon the type of investment property, your credit-worthiness, and your down payment. Today Fannie Mae and Freddie Mac pc place guidelines and fees for most home loans. Fees affect the final interest you pay directly. The bigger the fees, the bigger your rate above current mortgage rates.
The companies have one group of fees for personal residences, and yet another set for investment properties. For example, a 20-percent-down investment property loan would require a fee add up to 3.375 percent of the loan amount. Generally, the borrower chooses to pay a higher interest rate of extra dollars at the closing table instead. So, just how do these fees translate to your final rate? In this full case, 3.375 percent in investment property loan fees can be included in an extra 0.5 to 0.75 percent addition to the rate. Bottom line: If you would have received a 5% interest buying an initial residence, you would get a 5.5-5.75% rate when buying an investment property.
Keep at heart that this is for a single-family residence. Buy a duplex and you may pay another 1.0 percent to your fees, or a 0.125 to 0.250 percent addition to your rate. Why are investment / rental property loan rates higher? In a nutshell, mortgage borrowers tend to “bail”on local rental properties before their main residences if the heading gets tough. Researchers from the Wharton School concluded that even “good” homeowners have a tendency … Read more












