As the U.S. works its way out of the historically low interest rate environment that it has been languishing in for over a decade, mortgage rates have followed suit. Unfortunately, this has made borrowing money for both personal residences and investment properties more expensive.
Higher mortgage rates can cause challenges for residential real estate investors because higher mortgage rates can equate to less net income flowing in. The average mortgage rate today (October 5, 2022) for a 30-year fixed loan on a primary residence is just under 7%, with a 5-year ARM (adjustable rate mortgage) averaging 5.32%. But rates for investment property purchases can be even higher.
Even so, some experts believe that the current mortgage rates are still low in comparison to what they could be down the road. With that in mind, does it make sense to refinance your rental property(ies) before mortgage rates go up any further?
The answer to that is it depends.
For instance, based on the current mortgage rate on your rentals, today’s figures could still be a “bargain.” Likewise, if you secured any of your real estate investments through hard money or another type of private lender – which typically have rates that are much higher than the more “traditional” lenders like banks and mortgage companies – refinancing now could lower your monthly payment(s), in some cases, significantly.
Before moving forward with a refinance, though, make sure that you are aware of any other expenses involved, such as closing costs and points. It is also recommended that you compare the overall cost with several different lenders, as there could be a big difference in your out-of-pocket expenses.
If you are adding to your residential real estate portfolio, and the properties are located in Orlando or the surrounding Central Florida area, Incentive Properties can take on many of the time-consuming tasks – like finding and screening tenants, collecting rent, and responding to emergencies – off your plate.
So, if you would like to learn more about our services, contact us directly by calling (407) 279-1876 or sending us an email using our contact form. We look forward to meeting you.
Sources:
Today’s mortgage & refinance rates, October 5, 2022: Rates still low. Bankrate. https://www.bankrate.com/mortgages/todays-rates/mortgage-rates-for-wednesday-october-5-2022/