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Interest rates and certainty to close are important to investors.

Interest rates and certainty to close are most important to investors.

Interest rates and certainty to close are most important to investors.

Both Velocity investors and other investors view the interest rate as the most important factor when considering an investment property loan, with 9 out of 10 investors stating that this is their most important factor.

The certainty of a loan closing is also ranked high but appears to be slightly more important for Velocity investors compared to other investors.





Interest rates are typically the most important factor in considering a mortgage loan.  While every real estate investor wants a low interest rate, they don’t always qualify for one.  This is particularly true of independent real estate investors and small business owners who find it hard to qualify for a traditional bank loan with a lower rate.  In order to qualify for a loan and secure the property, they are often forced to pay significantly higher interest rates through a hard money lender.  The relationship between interest rates and certainty to close may explain why they are ranked in the number one and two positions by Velocity investors.

Closing fees follow as the number three ranked factor for other investors, while the term (length) of the loan fall in the number three position for Velocity investors.

Although further down in the rankings, Velocity investors are slightly more likely to identify cash flow as an important consideration in choosing a mortgage option compared to other investors. 

Other investors are slightly more likely to rank appraisal fees as an important consideration when considering mortgage options compared to Velocity investors.

Implications

As a mortgage broker, you won’t be able to offer loans with low interest rates to all investors, especially those who don’t qualify for a traditional bank loan.  If you are forced to offer a higher interest rate to an investor, focus on certainty to close to acquire the property initially.  Include a flexible term that allows an investor time to improve their credit and financials so that they can qualify for a lower rate loan that provides better cash flow.