Posted by admin | Posted in vacation rentals | Posted on 04-11-2006
Tags: finance, home, housing, investment homes abroad, investment homes australia, investment homes direct, investment homes direct llc, investment homes for sale, investment homes in florida, investment homes sale, investment homes scotland, investment homes tax deductions, money, realestate
Is it true that interest rates are higher on a investment home?
I’m in the process of buying an investment property, I was told that the interest rate is higher for a home that you don’t live in?
Usually, the lenders require a minimum 10% down payment for investment properties. Interest rate is about 0.25% – 1% higher than the interest rate for primary residential mortgage loans.
From a lending perspective, a “worst case” scenario occurs when a borrower suddenly experiences a little financial chaos…a “money meltdown” so to speak, a situation where the borrower can’t afford both a primary residence and a rental property at the same time. All things being equal, the investment property will go into default while every effort will be made to keep the homestead safe and secure.
While that’s not the only reason investment rates are higher for investment loans than for financing on a primary residence, the gist is still the same — investment properties represent more risk and more risk must be offset with higher rates.
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