Compare Non-Owner Occupied Mortgage Rates and Lenders
Review current non-owner occupied mortgage rates for January 23, 2018 and get personalized mortgage quotes from top lenders
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Mortgage Rates by Loan Product
Mortgage Rate ReportTuesday, January 23, 2018
Mortgage rates were mixed on the week although they seem to be gradually moving higher in response to the Federal Reserve's decision to raise interest rates in its December meeting. The Fed highlighted continued job growth, declining unemployment, expanding household spending and increasing business investment in its decision to increase the key Federal Funds rate by .250% to 1.250% to 1.500%. From the Fed's perspective, the positive labor and economic indicators outweighed lower than targeted inflation to justify the interest rate hike, which was widely anticipated.
Although mortgage rates surprisingly dropped immediately after the Fed's announcement, the dip was short lived and we have seen rates move moderately higher over the course of January. A string of positive labor market reports combined with the continued strength of the stock market has pushed treasury yields higher, with mortgage rates responding in similar fashion. While mortgage rates continue to be attractive, they have rebounded from their post Fed meeting lows and rates were flat or higher this week, depending on the loan program.
The interest rate for a 30 year fixed rate mortgage held steady at 3.875% and the interest rate for a 15 year mortgage also remained flat at 3.125%. The interest rate on a 5/1 adjustable rate mortgage (ARM) was stable at 3.250%, remaining attractive to borrowers seeking shorter-term mortgage programs. Jumbo mortgage rates also stayed put at 4.000% after increasing last week. On the flip side, non-owner occupied mortgage rates rose 0.125% for the second week in a row to 4.250%. FHA mortgage rates and VA mortgage rates also climbed with FHA rates increasing 0.250% to 3.500% and VA rates rising 0.125% to 3.375%. Although both FHA and VA mortgage rates inched higher, the programs remain appealing to borrowers focused on low or no down payment loan options, especially first-time home buyers.
The Federal Reserve's decision to increase interest rates was anticipated and although mortgage rates dropped briefly they have since followed the Fed's lead and moved higher in January. With the Fed reinforcing its outlook for multiple anticipated interest rate hikes in 2018 and economic momentum continuing to build to start the year, prospective borrowers looking to buy a home or refinance their mortgage may be able to lock in a lower mortgage rate by acting sooner rather than later, before interest rates rise, potentially at an accelerated pace.
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