I've been looking into refinancing a house that we bought with an FHA as our primary residence and are now using as an investment property. It's now below 75% LTV, but every lender wants to charge us a higher APR because it's an investment property. Is this one of those things where we can shop around and find a lender that is friendlier to investors (or build a relationship with lender for better terms), or is the APR on an investment property refi going to be the same regardless of the specific lender?
If you are looking at Conventional financing, all lenders should be within 0.125-0.25 of each other, unless you are getting hosed. Investment property rates are higher than a primary residence. Fannie Mae and Freddie Mac have LLPA's (Loan Level Price Adjustments), which are adjustments to the price (which in turn gives a higher rate) due to credit score, loan to value, occupancy, etc.
More simply put, in their infinite wisdom (and many years of real data), investors are more likely to default on a mortgage than someone who lives in the home. Hence the higher rate, due to higher risk.
Best of luck!
@Wade McMaster non owner occupied residences will always have a higher rate than a owner occupied home. Say you have a personal home with your family and investment property on the side. Should someone lose their job, which mortgage are you likely to pay first? The one that puts a roof over your family’s head.
That being said there are investor friendly lenders out there but pricing is still not going to be close to a traditional mortgage.
@Nicholas Covington I guess I'm not a normal person, but if I have a performing asset on one hand and on the other a primary residence that's bigger than I need, in a posh neighborhood, that costs more than I can afford, I'm going to keep the asset and move. But I see your point. Statistics show I'm the weirdo.
While I've got the attention of a professional lender: can I get a USDA 0% down mortgage while I've still got an FHA mortgage?
@Wade McMaster sorry I can't answer that one for sure. USDA does not like people having more than one residence I can tell you that, there are other restrictions as well especially since both USDA and FHA are for primary use only.
@Nicholas Covington I appreciate your time. As for the FHA, we bought that house for a primary, as required, but then moved out, (which, I double- and triple-checked, is legal). We're renting right now, so if we buy a new house to live in, that will be exactly one primary residence for us.
@Wade McMaster yes there is nothing wrong with that at all. But for USDA they are very strict about borrowers owning other property. Bottom line is you will need to have a good explanation to why you are purchasing a new residence as a primary. But that is between you and the underwriter.