If you purchase an investment property at the right price and correctly finance it, you can obtain a rental income almost immediately.
However, getting a cheap investment property mortgage rate is more difficult than the rate on a primary residence.
It is because mortgage lenders tend to add an upcharge for non-owner-occupied properties. Though the mortgage rate on investment properties is higher, investing in properties is always a great idea.
Different from the cheapest car insurance, here is how much the mortgage rate is on an investment property.
The Investment Property Mortgage Rate
Mortgages rates on investment property ranges from 50 to 87.5 basis points higher than primary home mortgage rates.
But these numbers depend on your down payment, creditworthiness, and the type of investment property you choose.
But as a practical rule, you may expect the interest rate on your investment property to be 0.50 percent to 0.75 percent higher than the rate on your main mortgage.
As it is said before, mortgage lenders will likely charge more for investment properties to protect themselves as they are more exposed to extra risks.
Mortgage borrowers tend to bail on their investment properties before they would bail on their primary residence, especially when things get tough. So, these types of home loans are more likely to default during hard times.
Recommended Investment Property Loans
After knowing the investment property mortgage rate, it is better to also know the best investment property loans. Here are some recommendations.
1. Quicken Loans
Quicken Loans offers a broad variety of loan types, lend nationwide, and make it totally easy for borrowers to apply for a mortgage online. It also offers competitive mortgage rates, making it the best overall mortgage lender.
Quicken Loans offers down payments as low as 3 percent on conventional mortgages, as long as you are qualified for their agency loans. It lends on VA loans, USDA loans, FHA loans, mortgage refinancing, and many more.
2. Veterans United Home Loans
As the name implies, this investment property loan is the best for veterans. Veterans United Home Loans specializes in VA-backed mortgages with professionals and experts who understand this loan type better than any firms.
This firm is one of the biggest VA mortgage lenders in the United States in terms of volume. It offers many benefits, including no private mortgage insurance, no down payments, lower rates, flexible qualification guidelines, and many more. Are you interested in applying for one here?