As interest rates tend to be low in today’s market, and with creative financing available, NOW is the perfect time to purchase 2nd home or investment property! We always inform our clients, though, lenders typically ask for larger down-payments or bump interest rates on investment property if the owner will not be occupying it. The reason is the lender sees that here is more risk involved on second homes or rental property, and there is a great possibility of default. Also, renters are know to not treat properties nice, which can kill the home’s value.
Here are some pointers to get the best deal on mortgage rates when financing investment properties:
- Keep your credit clean, and fix any issues before you make application.
- Openly talk with your lender, and find out what you can afford comfortably in case you have to make the payments for several months while searching for a buyer or renter.
- Ask if the seller or the lender can provide you financing. This might help you not have to put down a large down payment or lower you interest rate.
- Plan to put down 20-25% if possible. This shows the lender you are willing to take more of a risk.
- Do research and show the lender that you understand the vacancy rates of properties in your area. This makes you look more professional.
- If you already have a great renter lined up, let them know.
- Lender’s normally want to make sure that the title on properties re free and clear. Take care of that ahead of time.
If you are ready to purchase investment properties, call us at 615-474-2808, of just fill out the form below!