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Re: Yep, interest rates for speculative reasons are higher because they are riskier

Posted by Ward-CA- on December 29, 2001 at 11:17 PM

In Reply to: Are interest rates for an investor different???? posted by maryann on December 29, 2001 at 8:31 PM

: I am a beginner investor, so I thought a good place to start was at a mortgage company to pre-qualify. I told him my plans and I was told that I should have no problems. We discussed interest rates and closing costs. I was told because I am an investor the rate would be higher (7.75)in Ohio and 1 point. Does that seem right???? Would appreciate any feedback. Thanks!!!!!

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Maryann, a homeowner loan rate is lower because it is felt to be a safer loan than a loan made to a person for investment or speculative intentions. The basic idea is that we will fight harder to not lose the home we live in than a house we are renting or holding for no reason other than to make money.

From experience lenders know we will dump our investment properties and walk away from them easier than we will our personal residence.

Hope this helps explain the disparity in such loan rates.




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