Financing investment properties can be done in different ways. Real estate investors who opt for taking out a mortgage should know the expected investment property mortgage rates for 2018.Investing in real estate requires a good amount of capital. Many real estate investors can’t pay for these investments in cash. It’s quite popular to take out a mortgage loan when you’re buying an investment property. Finding the right loans at the right investment property mortgage rates can be just as important as choosing the right property.
Do you want to know how to invest in real estate with little or no money? Well, you first need to understand how mortgages work and what the right investment property mortgage rates are. When you take out a mortgage, you are borrowing money for a property. Many homeowners take out mortgages for their homes. When it comes to investment property financing, you’re taking out a mortgage for the property you’re buying. This money being borrowed is either coming from a local bank, national bank, or a lender.
A mortgage is a secure loan with your property as collateral. The lender will hold the title to your investment property until you pay off the entire real estate investment loan. You make payments each month based on the investment property mortgage rate. Making money in real estate means understanding the different investment property mortgage rates and their ratio with expected returns. Real estate professionals know whether they’re choosing the right investment property mortgage rates.
The difference between mortgages for a home and a business are that it’s harder to get one than the other. When purchasing an investment property, you have access to many of the same private mortgage programs as people buying their homes. They just cost more and are harder to get.
The Difference for Investment Property Mortgage Rates
Before we can discuss investment property mortgage rates, lets cover actually getting a mortgage first. Being eligible for an investment property loan could be a bit more difficult than you think. This is because the real estate investment business is riskier. Lenders know that real estate investors are less attached to the property than a homeowner. This means that they are more likely to dump mortgages than homeowners if it comes down to it.
Investment property loans usually require larger down payments. This is because private mortgage insurance is generally unavailable for investments like rental properties. To get the lowest investment property mortgage rates, consider putting at least 20% down. This down payment will probably get rid of the added costs. You’ll also need a higher credit score; again this all comes back to the risks associated with real estate investment. Finally, if you’re investing in a rental property, a lender will be more confident in giving you a loan if you have property management experience. How much higher investment property mortgage rates depends on the type of investment property, your credit-worthiness, and your down payment.
Property investors who have been in the game for a while know what to do. They know that just keeping up your end of the deal isn’t always enough. Even if you’re confident in your credit score and have the ability to put down 20% plus there’s still one more thing to do. Don’t just consult one lender. If you want to invest in real estate and get a great deal, you need to consider multiple lenders. Professional real estate investors know that there’s always a real chance to get a better deal somewhere else. Only consulting one lender could potentially cost you thousands in lost savings. So be wary of making these simple errors.
Investment Property Mortgage Rates: 2018
We covered how to higher your chances of getting low investment property mortgage rates. Now let’s discuss what you can expect from the housing market this year. It is currently a seller’s market so there’s high demand for investment property for sale. Mortgage rates often remain fairly stable as the years pass by. However, as of 2018, mortgage rates have reached their highest levels in four and a half years. For the last 56 months, rates had remained below 4.58%. This barrier hasn’t been passed since August of 2013. Higher percentages in mortgage rates mean an even harder time for real estate investors in getting low investment property mortgage rates.
Mortgage rates have already surpassed the forecasts from major housing agencies at the end of 2017. Agencies such as Mortgage Bankers Association, Freddie Mac, and the National Association of Realtors have predicted a range of 4.5%-4.9% for the remainder of the year. Everyone is in agreement that mortgage rates are only getting higher.
We’re only saying that rates are high because of their comparison to the lowest rate levels ever recorded. Rates are actually better today than they have been in 85% of history. The economy had a hard time after the collapse of the housing market in the 2007-2009 recession. However, it’s made a near-full recovery and in response to that, there’s an economic expansion. Rates are expected to only get higher and higher in the coming years.
To Sum It All Up
Investing in real estate has its ups and downs. Being a real estate investor is a great career but it has its difficulties when it comes to qualifying for low investment property mortgage rates. Investment property mortgage rates are expected to only increase in the future following the expansion of the economy. Being prepared for these higher rates can make all the difference. Don’t forget what helps you in the process of financing your investment properties. To get low mortgage rates make sure to have a good credit-score, large down payment, and experience. You can visit Mashvisor to start your search for investment properties and find the best real estate properties before mortgage rates get even higher. To start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after, click here.