In today’s market, it’s not easy to find the best mortgage rates for rental property. In fact, with so many lenders having had to eat flipped houses that ended up being foreclose upon, some banks will almost refuse to touch an investment mortgage. But there are a few things that you can do to help you get the best rates for your rental property mortgage.
Compare Lenders Online
The number one best thing that you can do to get the best rate on an investment property is to compare lenders online. That’s why we recommend LendingTree Mortgage Loans. You can compare up to four offers from lenders at once so you can be sure that you’re getting the best rate around. You can get started by filling out the banner below.
It’s All About the Equity Baby
Many times your ability to get a low rate on your rental property mortgage will be directly tied to the amount of equity that you have in a property. This means that for a new rental you will need to have a sizeable down payment and for refinancing investment property you’ll need to have paid back a significant portion of your original loan.
One way that you can help yourself out here, especially if you already own a property, is by using extra income from the rent each month to make improvements to the property. Improvements in the property will raise the property value, thus increasing the amount of equity you have in it and making it easier for you to qualify to refinance investment property. This money could also be used to pay back the mortgage, but if you mortgage has an early prepayment penalty, it might not be worth it.
Rental Income Is Key
One thing that you can’t be without is records of rental income. So if you currently own the property, make sure that you’re keeping tabs on how much money you’re bringing in each month minus your expenses. Banks typically won’t approve a mortgage for your rental property if you can’t cover the mortgage payments with the rent and then have a buffer for vacancies.
If you’re buying a new property, make sure that you can get copies of their rental records and verify that they are accurate to the best of your knowledge.
A loan for a rental property, or any kind of investment properties, is different than your normal home loan. Because you don’t live in the house, banks will see you as having less of a stake in it and more likely to default on the loan. You can combat this to get a good rate by either taking a strong equity position in the property or by showing them that you will generate enough cash to easily pay your bills each month. If you’re ready to start looking at rates from different lenders, fill out the form below to get started looking at offer from Lending Tree – where banks compete and you win!