Real estate investment has become very popular in the last few years. With all kinds of “no money down” real estate courses being sold on infomercials and in every home business or investing publication that exists, people have rushed to buy properties for investment purposes. Unfortunately, many of these people are not interest rate savvy and are doing themselves a disservice by not refinancing some of their investment property mortgage loans.
Refinancing an investment property can be complex, but there are some things you can do to make sure you’re doing it at the right time and you’re getting the lowest interest rates possible. The key is to stay on top of the mortgage industry trends and know when to dig deeper and consider a refinance.
The first thing is, do your homework. Interest rates change constantly. The going rate this morning may change by this afternoon! Unless you know what it is, you don’t know if you’re getting the best deal or not. And it makes a big difference! Small adjustments in interest rates can mean tens of thousands of dollars difference in total payments over the life of the loan. Read the financial news. Track mortgage interest rate trends, especially in your country or local area. An educated consumer is a wise consumer. This applies to loans as well as any other purchased item.
Second, use a mortgage broker. These trained professionals know exactly how to get the lowest interest rates possible, no matter what your specific circumstances. If you have a poor credit rating or are self-employed, you have a unique situation that brokers are trained to handle. They have access to thousands of lenders, each with many different programs. They know how to evaluate these programs and find one that will fit your needs. In combination with your own expert knowledge of current economic trends, using a mortgage broker will help you immensely in finding the best refinancing deal.
Third, buy down as much as you can. “Buying down” is a term used to describe taking some of the interest expense up front as “points.” The more you can do this, the lower the interest rate you’ll end up paying on the loan. This is always a good idea. Buy down as much as you can afford to. It may cost an extra few thousand at closing, but it will save tens of thousands in interest payments over the life of the loan.
Forth, negotiate. It’s not very well known that you can negotiate to lower your loan interest rates. Talk to more than one lender, or even more than one mortgage broker. Make sure each knows that you’re talking to others. Indicate that others have given you a lower rate. Don’t lie, but always be prepared to walk away. If you’ve done your homework and know the going interest rates, you’ll find that negotiation will bring you to the rock bottom interest rates you’re looking for.
These four tips will help you save thousands of dollars with the proper refinancing to the best possible interest rates for your investment properties.