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Question for the mortgage gurus

736 views 5 replies 4 participants last post by  ChumpChange 
#1 ·
Why are interest rates higher for a rental property? Is it that they're afraid you're more likely to default on the loan?

If I refi my current mortgage to buy another rental property, do I have to tell them what I'm taking the money out for and if so, can I take it out to buy rental property?

Thanks
 
#2 ·
Why are interest rates higher for a rental property? Is it that they're afraid you're more likely to default on the loan?

If I refi my current mortgage to buy another rental property, do I have to tell them what I'm taking the money out for and if so, can I take it out to buy rental property?

Thanks
Yes, risk premium (i%) = to default risk.

good luck getting a cash out refi. but if they'll loan it to you buy whatever you want with it.

However, remember gambling with borrowed money is typically a bad idea.
 
#3 ·
My current mortgae is almost non existant and we have one rental that is paid for 100%. We need a tax write off and since we are both self employed, this is our 401K:D

With a credit rating of 785, do you still think we'd have a hard time getting cash out:(
 
#4 ·
My current mortgae is almost non existant and we have one rental that is paid for 100%. We need a tax write off and since we are both self employed, this is our 401K:D

With a credit rating of 785, do you still think we'd have a hard time getting cash out:(
If you've paid off your real estate, go for it. you can get equity out but sounds like you'd be getting an equity LOC instead of a second. interest rates on LOCs are 200-300 basis points higher.

are you going to make the new house your primary residence and rent the old one?

check the tax code for the best write off options.
 
#5 ·
When I borrow for rental the 15-30 year Fixed comforming rate is usually .5% higher that owner occupied loan, same point structure. FYI now lenders generally require 30% down on non occupied, but loan limits increase with each unit in the 2-4 unit range.

Above 4 units is a different loan game.
 
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