How can I secure the best mortgage rates for my investment property?

[David Ounanian]

The best mortgage rate for your investment property that is available to the general public is going to be in the form of a conventional loan. I say the general public because there is a way to get an even lower rate but it involves a personal relationship with a private money lender. You can negotiate your own terms with a private party who may be willing to give you a lower rate than what is available on the public market. For instance, I once asked a family friend to loan me some money for an investment property. The money they had was sitting in a savings account accruing 1% interest per year. When we negotiated the rate they thought 4% would be a great deal for them. I was also happy with that as conventional loans at the time were at about 6%.

Lowest rates possible will be in relationships with private money lenders.

Lowest rates in the public market will be in the form of a conventional loan.

Next up you have commercial mortgages that are usually slightly higher than conventional loans but don't have as strict of loan requirements as conventional loans do.

Usually a bit higher in rates are DSCR (debt service credit ratio) lenders. They usually run a good 1-2% percentage points higher than a conventional loan. These type of loans have the least requirements and are usually approved based on the investment property alone and not the income of the borrower.

The highest interest rates will be from a hard money lender. They specialize in quick and fast loans that will come with credit card like interest rates.

Here are some additional tips for securing the best mortgage rate for your investment property:

• Build a strong credit profile
• Save for a larger down payment
• Shop around for lenders
• Consider different loan types
• Demonstrate a stable Income
• Choose the right property
• Build a relationship with the lender
• Be prepared with documentation
• Consider interest rate buydowns
• Monitor interest rates