Rental Property - How To Lower Your Monthly Payment

Summary

There are many new mortgage options for rental property owners.

Here are some loan options to lower your monthly payment.

Basics

Mortgage lenders offer many loan types to rental properties, including:

• townhouses
• condominiums
• single family residences
• 1-4 unit properties

As you know as a rental property owner the interest rate on rental properties tend to be higher than for regular primary residence loans.

Loan Options

Your loan options to get a lower payment include:

• Interest only payments
• Minimum payment options

An interest only payment allows a rental property owner to pay only the interest on a mortgage. This allows a landlord to pay only interest. The principal balance for the loan remains the same.

The landlord realizes their gain on equity through the rise in property value. This obviously depends on real estate market trends.

A minimum payment option allows a borrower to pay less than the interest only amount. Any difference between the interest only payment and the minimum payment option is added onto the principal. For example, if the interest only payment is $1,000 and the minimum payment option is $600, the difference of $400 is added onto the principal.

For many landlords an increase in principal over time may be acceptable to get a lower monthly payment. This may help a landlord manage their cash flow better. This can help when rental payments are slow due to vacancies or tenant problems.