Buying Down Mortgage Interest Rates for Real Estate Investors
There are several ways to improve cash flow on your rental properties. One option is to put more money down to reduce the amount you borrow. In some cases, this can also improve your interest rate by lowering your overall loan-to-value. However, when comparing putting more money down to buying down the mortgage interest rate, it is usually better to buy down the interest rate for any reasonable holding period. This is true from both a return on investment and improved cash flow perspective.
Learn more about buying down your interest rate in this mini-class.
Check out the video from this class here:
In this class, James discusses:
- Buying down mortgage interest rates when buying a rental property
- Improving cash flow by buying down your rate
- You can choose your interest rate by how much you're willing to pay or receive as a credit toward closing costs
- Rate changes for the life of the loan
- What's a point and how do they work?
- What's par rate and why it is critically important to seek clarity from your lender when they quote you a rate?
- What can you do with extra money when buying a rental property?
- Comparing more down payment to buying down your interest rate
- Requesting a buy down table from your lender (and what they look like)
- Plugging numbers into the buy down spreadsheet
- Looking at the cost difference when buying down your rates to various levels
- Selecting where to buy down to
- Simple and compound return on investment calculations done for you
- Putting more down improves cash flow in 3 important ways
- Comparing more down payment to buying down interest rates (not just cash flow... cash flow and equity)
- Temporary solution to buying down rate or pre-paying PMI
- Download the Mortgage Buy Down Spreadsheet
- Plus much more...