Utah has one of the highest homeownership rates in the U.S. Plus, they have low property tax rates. Even with those positive stats, mortgage payments in Utah are still the fourth most expensive state to buy real estate.
If you plan to invest in the Murray real estate market, you must evaluate your potential return on investment.
Buying real estate can be complex, but understanding the process can have many advantages. Focus on the basics, such as applying for a mortgage, researching mortgage rates, having a home inspection, and closing the deal.
These aren't major factors when investing in the real estate market. Location is a big factor, as well as the price of the house. When looking for Murray real estate, you must consider neighborhood culture, access to amenities, and proximity to major roadways.
Are you considering investing in real estate? Here are three things to know about mortgage rates in Murray, Utah.
1. Mortgage Rates for Investors
Mortgage rates are characteristically higher for investment properties than those for primary residences. The difference is usually a few percentage points more than a regular loan for a primary home.
For instance, if you want a 30-year, fixed-rate mortgage for a primary home, the current market rate is about 6.5 percent. But that could change to 7.5 percent. Contributing factors include the following:
- Current market
- Credit score
- LTV ratio
- Loan amount
- Type of property
Some lenders consider real estate investing riskier than primary homes, mainly because rental income isn't guaranteed. Plus, the mortgage system favors home ownership when it comes to government-backed loans.
Overall, expect to pay 0.50% to 0.75% higher mortgage rates than the average home buyer.
2. Downturn in Real Estate Market
This is one thing that might benefit investors looking at real estate in Murray. Both home sales and prices are declining across the country. These two factors make it a great time to invest.
Even with the current high mortgage rates, the lower home prices will balance out. You also have the option to refinance when and if the Feds lower the interest rate.
3. Mortgage Loan Period
Real estate investing is a numbers game. Real estate Investors are not looking to invest their financial resources in rental properties. They also aren't looking to sign up for a 30-year mortgage.
Lenders realize the shorter the loan term, the less risk of the borrower defaulting. Therefore, the loan term can impact the mortgage rate on real estate in Murray.
Also, remember that the borrowers' credit score will impact their interest rate. Advertised mortgage rates are typically based on a borrower having a 740 credit score and making a down payment of 30 - 40%. As those numbers go lower, the mortgage rate goes higher.
Congratulations on Your New Property!
Mortgage rates aside, investing in the real estate market has big responsibilities. That's why property management should be your next investment.
Salt Lake PMI will ensure you get the most out of your investment. Contact us today for free rental analysis and learn how we can make managing your rental property easier!