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How much worse will the mortgage rates be for an investment property with high ltv to refinance?

What is the maximum ltv reasonable for an investment property? by johnsonfam507 from Sherman Oaks, California. Aug 11th 2015 Reply


Hans Bruhner (Hans Bruhner)
#97 ranked lender in California - 101 contributions

The rates will end up being about .375 higher for an investment property at a 75% Loan to value and if it is an 80% loan to value then it will be a little higher than that. You can choose to pay higher fees and keep the rates down. There is no real exact answer because it is more of a formula than a higher rate. I am in CA and can help at (866) 385-1650 or www.AsktheLoanMan.com

Aug 11th 2015
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Mark Hemingway (SFSLend)
#1 ranked lender in Colorado - 599 contributions

It can vary as lenders have different pricing adjustments for either 75% or less LTV or 75.01% to 80%% LTV. You definitely want to hope you are at 75% LTV or less. But it is going to be at least 0.375% in rate as the pricing adjustment is going to be over 3 points. That will equate to at least 0.375%. So you really want your broker to shop around for the best base rate but at the same time find a lender that has lower pricing adjustments for investment properties. There is probably more like a 0.375% difference in being at 80% for investment versus 75% for investment as the price difference for the rate is over 1% in points. So definitely work with a broker that has a broad range of lenders to choose from as many lenders have their own pricing adjustments for investment properties based on the exposure and risk they want.

Aug 11th 2015
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,055 contributions

Yes rates will be higher, and just to show you how fast things change in this industry.. the other responses say you can refi up to 80% LTV, but the latest changes to FNMA (June 30th, 2015), state that 75% is the maximum LTV for a refinance on an investment property.. and you can expect the rate to be at least 1/2% higher than owner occupied properties. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Aug 11th 2015
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Thanks gents for the answers, everything jives with all 3 answers, but my question now is there any difference between investment and second home? Can i just explain it out as a second home and get the same as best rates?

Aug 11th 2015
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Hans Bruhner (Hans Bruhner)
#97 ranked lender in California - 101 contributions

to qualify as a second home and get owner occupied rates, it has to be a decent distance from your primary residence and we like to see that it is near a lake or golf course or ocean or mountains..... A decent distance is typically looked at as 35 miles or more. The other issue is that if you buy it as a 2nd home then you need to qualify for both payments on your own. If you buy it as an investment then you get to count projected rental income to help offset the payments and help you qualify.

Aug 12th 2015
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,055 contributions

There is a difference between an investment and 2nd home.. the 2nd home will give you a better rate, but what type of loan do you have on it now? Owner occupied, investment or 2nd home.. if you bought it as an investment, and your tax returns show rental income, then your not going to be able to sell it to the lender that's it's now a 2nd home.. Also, for 2nd home, lenders will only consider it if it's truly a "2nd home" or "Vacation" home.. how far away is it from your primary residence? if it's just blocks away, then you will never get anyone to do it as a 2nd home.. if it's 100 miles away, on a lake or river with other vacation homes, then it's possible, but not if you are showing rental income.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Aug 12th 2015
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,109 contributions

The maximum LTV on an investment property for a Conforming loan is 75%. The rate will be higher and by how much will depend on the LTV and credit score. You should speak with a local loan officer and see what your available options are. Best wishes, Sean

Aug 16th 2015
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