Compare Non-Owner Occupied Mortgage Rates and Lenders
Review current non-owner occupied mortgage rates for April 25, 2018 and get personalized mortgage quotes from top lenders
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Mortgage Rates by Loan Product
Mortgage Rate ReportWednesday, April 25, 2018
Mortgage rates moved mostly higher on the week although there were also some positive signs as the market continued to respond to the Fed's increasingly hawkish stance on rates. In its March meeting, the Fed pointed to strong job growth, record low unemployment, an improving economic outlook and an expected boost in near-term inflation to justify its decision to raise the Federal Funds rate 0.250% to 1.500% to 1.750%.
The minutes from the March meeting also shed more light on the Fed's more aggressive outlook on rates. Fed members were unanimous in their forecast for higher inflation, accelerating GDP growth and additional interest rate increases in the future. The Fed meeting minutes highlighted the 2017 tax cuts and recently passed budget as potential economic catalysts, which is code for sources of inflation, while also recognizing the the negative effects of a possible trade war. In sum, the meeting minutes reinforced the Federal Reserve's aggressive forecast for interest rates with the market anticipating two more rate hikes in 2018 and four rate increases in 2019.
Mortgage rates were mixed in response to the meeting minutes as relatively little new information was released. Most lenders had already factored the Fed's March rate hike into their mortgage rate pricing and the expected number of future rate hikes remained unchanged despite the Fed's bullish tone. Over the past week, however, mortgage rates increased moderately as fears of a trade war receded and more positive economic news hit the market, although the news was not all negative for borrowers.
The interest rate for a 30 year fixed rate mortgage increased 0.125% to 4.375% while the interest rate for a 15 year mortgage climbed 0.125% to 3.875%. The interest rate on a 5/1 adjustable rate mortgage (ARM) also moved 0.250% higher to 3.875% as short term mortgage products became more expensive. In more positive news, FHA mortgage rates and VA mortgage rates were flat at 3.875%, with both programs appealing to borrowers focused on low or no down payment options, especially first-time home buyers. Jumbo mortgage rates were also steady at 4.375% while non-owner occupied mortgage rates remained at 4.625%.
The Federal Reserve's decision to increase interest rates in March was widely anticipated and its meeting minutes only made its long-term outlook more clear. Although there was a bit of a a delay, we are now seeing mortgage rates gradually move higher in response to the Fed. With the Fed reinforcing its forecast for multiple rate hikes in 2018 and 2019 (up to six!), prospective borrowers looking to buy a home or refinance their mortgage may be able to lock in a lower mortgage rate by acting now. While interest rates are challenging to forecast, the Fed's latest statement and meeting minutes underscore how higher inflation could yield more aggressive action on interest rates.
Because mortgage rates fluctuate daily, we continue to actively monitor the mortgage market for updates. Borrowers should check the FREEandCLEAR mortgage rate tables regularly to review customized, updated mortgage rates for lenders in their area. Our rate tables are free to use and require no personal information.
What You Should Know About Non-Owner Occupied Mortgages
Higher Interest Rate.
The interest rates for a mortgage on a non-owner occupied or investment property is usually 0.250% - 0.500% higher than the rate on an owner-occupied property. Additionally, closing costs for non-owner occupied mortgages are also usually higher. Please note that properties that you buy to earn rental income are considered non-owner occupied properties whereas second homes and vacation homes are considered owner occupied properties.
Higher Down Payment Required.
Lenders usually require that borrowers contribute a down payment of 20% - 25% for mortgages on non-owner occupied properties, which means your loan-to-value ratio is 75% - 80%. Additionally, investment properties are not eligible for most conventional or government-backed low or no down payment mortgage programs.
For non-owner occupied mortgages, lenders typically require that borrowers maintain a certain amount of money in reserve at the time your mortgage closes. Reserve requirements range from two-to-six months of total monthly housing expense per property depending on lender guidelines and the number of investment properties you own that are financed with a mortgage. The more investment properties you own (that are mortgaged), the greater the reserve requirement.
Mortgage Tax Benefit Does Not Apply.
The interest expense mortgage tax deduction does not apply to investment properties which is different than an owner-occupied mortgage. Borrowers should contact a tax specialist or accountant to review how tax guidelines apply to investment properties and non-owner occupied mortgages.
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More FREEandCLEAR Mortgage Resources
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Non-owner occupied mortgages can be challenging so hit up the FREEandCLEAR Mortgage Expert with any questions. The feature is free to use plus you will receive an insightful answer within 24 hours