Tips on Getting a Low Interest Rate on an Investment Property Mortgage
By Peter Harper, MortgageFit Community
Buying your investment property can be tricky. You need to get the best mortgage in order to lower the cost of buying the property. So, how can you get the low interest rate on the mortgage that you will be taking out against the investment property?
There are some tricks that can help you in getting a real good offer on the investment property. In fact, getting a low interest rate mortgage is important because you may face problems in the future in making the payments in case the interest rate is high. Then, you may have to try and refinance the mortgage in order to save your investment property.
Taking Out a Low Interest Rate Mortgage
In order to get a low interest rate mortgage on your property, you will have to:
Have good credit - In order to get a low interest rate mortgage, you need to have good credit. The better your credit score, the better will be the offers on the mortgages that you will have to take out in order to finance the investment property. In fact, you need to have a credit score above 730 in order to get the best mortgage rates.
Have a clean credit report - In addition to having a good credit score, it is also important for you to have a clean credit report. That is, there should not be any missed payments, any judgments or liens, any collections, or any foreclosures listed on your credit report. If you have any of these negative items listed on your credit report, you won't be able to get mortgage at the best available interest rate.
Have high affordability - You need to have high affordability in order to get a low interest rate mortgage. What that means is you are actually required to show the proof of your income to the lender while applying for the loan. It is in general considered that if a person has high affordability, he will have the ability to go on making the payments on the home loan. This lowers the risk on the part of the borrower and thus the lender may offer you a low interest rate.
Have a low debt-to-income ratio - In order to get a good offer on the mortgage, like a low interest rate, it is important for you to have a low debt-to-income ratio or DTI. DTI is the ratio that shows your total debt payments against your net income. The lower the DTI, the better will be the mortgage offer.
These are other things or eligibility criteria that can help you in taking out a low interest rate mortgage. Other than this, you are also required to follow some important things in order to get low interest rate mortgage offers on the investment property. It is important for you to shop for different mortgage offers and then compare them. This will help you in understanding as to how the change in the interest rate and the loan term is going to affect the home loan payments.
Now, how can you so easily compare amongst the different offers? In order to compare amongst the different mortgage offers, get a hold of a mortgage calculator. There are various websites that offer free usage of a mortgage calculator. After shopping for different mortgage offers, you will have to enter the details of all of the offers one by one into the calculator. This is going to help you in comparing amongst the different offers, thereby helping you to get the best of offers – like a low interest rate mortgage for your investment property.
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Lew Corcoran, ASP®, IAHSP, IAHSP-CB