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Non-Owner Occupied Mortgage Rates

Compare Non-Owner Occupied Mortgage Rates and Lenders

Review current non-owner occupied mortgage rates for August 18, 2018 and get personalized mortgage quotes from top lenders

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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Click here for more information on rates and product details.
 

Mortgage Rates by Loan Product

Loan
Current Rate
Last Week
Trend
4.250%
4.375%
3.625%
3.750%
3.750%
3.875%
3.875%
3.875%
3.875%
3.875%
4.375%
4.500%
4.625%
4.625%

Mortgage Rate Report

Saturday, August 18, 2018

Mortgage rates dipped lower for the second consecutive week after the Federal Reserve decided to keep interest rates unchanged at its August meeting.  Although the Fed's statement reflected its more aggressive rate strategy, its move to stay put was widely expected after its June hike.  The Fed's concise statement highlighted a strengthening economy including a strong labor market, household spending and business investment.  Although some could interpret the use of more hawkish language as paving the way for future interest rate hikes, the mortgage market responded positively to the Fed's decision to hold the target Federal Funds rate at 1.750% to 2.000%.

Bullish telegraphing from the Fed as well as a string of favorable economic news had pushed mortgage rates higher for much of the summer but rates have pulled back the past two weeks, which is positive news for borrowers. Rates dipped last week on the news that the Fed left interest rates unchanged and slid again this week as turmoil in the global currency market led investors to buy U.S. treasuries, pushing yields lower.  Lower treasury yields usually translates into lower mortgage rates, which is what happened this week.

The drop in rates may only be temporary in light of recent reports that show a tightening job market, although moderate wage growth could help keep inflation low and benefit mortgage rates.  Although the real estate market is facing challenges due to a lack of affordable inventory and other factors, the overall strength of the economy is offering little reason for the Fed to change course which could lead to higher mortgage rates in the future despite the decline we saw this week.   

The mortgage rate for a 30 year fixed rate loan slid 0.125% to 4.250% while the rate for a 15 year fixed rate mortgage dropped to 3.625%.  The interest rate on a 5/1 adjustable rate mortgage (ARM) also declined 0.125% to 3.750%.  FHA mortgage rates and VA mortgage rates both held steady at 3.875%, with both programs appealing to borrowers focused on low or no down payment programs, especially first-time home buyers.  Jumbo mortgage rates dropped to 4.375% while non-owner occupied mortgage rates remained at 4.625%.

Although the Fed's decision to keep rates unchanged was anticipated, the mortgage market's reaction to the news was pleasantly surprising.  After rising moderately over June and July, the drop in mortgage rates is welcome news for borrowers.  While interest rates are impossible to predict, prospective borrowers looking to buy a home or refinance may be able to lock in a lower rate by acting sooner rather than later.  As lenders react differently to dynamic market conditions, we have also seen greater fluctuations in mortgage rate pricing, which means borrowers benefit more by comparing several lenders.

Because rates change constantly, we continue to actively monitor the mortgage market for new developments.  Borrowers should check the FREEandCLEAR rate tables regularly to review personalized, 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

1

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.

2

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.

3

Reserves Required.

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.

4

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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