In the fourth quarter of 2019 and the first quarter of 2020, we have seen historically low-interest rates. These rates plummeted even further at the end of March as the global pandemic shook the worldwide economy. While it’s all over the news, what does that mean for you as a property owner, or more specifically, as a landlord?
Throughout 2020 thus far, mortgage rates have fallen, mainly in response to concerns around the impact of COVID-19. In the first week of March, rates on a 30-year fixed mortgage dropped to an all-time low. Mortgage rates, much like student loans and more, are tied to the yield on the 10-year US Treasury note. As it declines, credit gets cheaper and more attractive to both individuals and businesses –– such as landlords.
So, how can you, as a landlord, take advantage of these record low rates?
Perhaps you’re a hopeful landlord-to-be, and you’re looking to purchase a new primary residence and convert your current home into an income property –– this is a great time to act. You’ll be able to take advantage of these record-low rates for your new purchase. Bonus: you can refinance your current home while still living in it at the rates for primary residences. Then, when you purchase your new home, you’ll gain access to those record-low rates. It’s generally much easier to refinance a primary residence than a rental property.
Alternatively, you may not be looking to expand your real estate portfolio, but rather can refinance your primary residence’s mortgage. This is another excellent way to save money –– perhaps putting it towards a future property or maintenance and upgrades to your current ones.
Expanding Your Portfolio
While rates are almost always higher for non-owner occupied properties as compared to primary residences, mortgages on investment properties are still sitting at record low rates. While the actual difference in rate depends on several factors, including the type of property –– whether it’s one unit or multiple, your credit score and your down payment, you can expect it to be at least 0.50-0.75% higher than the rate on your primary mortgage.
While nationwide, there is a housing shortage, it’s important to remember that there are desirable properties still on the market. When looking to expand your portfolio, first identify who the ideal tenant is for this new investment –– perhaps thinking outside of the type of tenant you’re accustomed to unlocking different properties than you currently own.
The Bottom Line
As with any pursuit as a landlord, some grit and creativity are needed. With some savvy business moves and the right support from ezLandlordForms, you’ll set yourself up for success.