Buying A House for Rental Units

by Real Estate Investor

Regarding Buying A House for Rental Units: Are mortgage rates higher if I'm buying a house for rental units that's not intended to be a personal residence? I'm considering purchasing a condo as a rental investment.

My lender tells me that my interest rate on the mortgage is going to be about .5 percent greater because I'm buying it as an investment property.

Is this standard and if so, is there any way around it? I have no plans to reside in the rental unit. Thanks!

Kate Answers: Buying A House for Rental Units

Dear Real Estate Investor, Statistically, a greater number of investment properties experience foreclosure compared to personal residences. Therefore mortgage lenders charge a higher interest rate to offset their perceived risk.

Although buying a house for an investment carries a little higher mortgage rate, the long-term benefits can offset the higher payment. A tax professional should be able to tell you if owning real estate investment properties can save you money.

You might be surprised to know the lowest rate is not always your best mortgage rate. Little or no closing costs with a little higher interest rate could still be the best deal for your mortgage. Learn how to compare mortgage interest rates for the lowest payment.

Best Wishes As You Invest,


P.S. Go to my Best Mortgage Rate Blog, an entertaining source of mortgage information. Subscribe now to the RSS feed.


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You can also ask Kate about your mortgage at Ask Kate About Buying a House.

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