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Are interest rates higher for a refinance when the house is being rented out?

I am looking to refinance my house, but am also looking to rent my house out. I have heard that interest rates are higher when the house is being rented out. I am trying to to see if I should refinance first before renting my house out in order to get a better interest rate. Does this matter at all? Any help would be very appreciated.
  • July 28 2012 - Power Ranch
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Answers (4)

Best Answer

There are quite a few differences in the costs that can increase the rate if you do not want to pay for those rate adjustments out of pocket when you come to close.

One of the loan documents a Borrower signs when closing on a Primary Residence transaction states that they agree to move into the move within two months & further agree to live in the home for a minimum of 12 months. If the intent of the Borrower, when signing this document, is to rent out the subject property, then this is loan fraud - it's just not worth it.

Now, lets suppose in this case that the Borrower rents out the property anyway. Well, when they apply for a new loan, Underwriting will check to see if they've closed on another Primary Residence within the last 12 months. That loan will pop up & the Borrower will be denied the loan.

Be sure you work with someone knowledgeable in this area, with low rates & fees.

Please feel free to contact me directly if you have any further questions, I'd be glad to help. 

All the best, 
Ros 

Roswell Moore, CMPS 
Certified Mortgage Planner 
Scottsdale, AZ

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  • July 28 2012
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Interest rates and fees are usually higher for non owner occupied loans.  But with how low rates are right now, its still a sweet deal in most cases to refinance.  I would be honest with the lender and see how much money they can save you with a non owner occupied loan. 
  • August 23 2012
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There are quite a few differences in the costs that can increase the rate if you do not want to pay for those rate adjustments out of pocket when you come to close.  
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in other words, same rates, higher closing costs.

If you don't want to pay the closing costs, pick a higher rate.
  • July 29 2012
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Rates are the same for investment homes, the fees do go up depending on down payment. misleading a lender as to the occupancy of a home is mortgage fraud.
  • July 28 2012
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