Over the years, Renting out homes has become an increasingly popular way to make a profit. Although there is money to be made with this growing trend, there are a few things landlords need to know about Kansas City mortgage rates before they move forward with this venture.
“Buy to Let” Mortgages
Being a landlord may be tempting to homeowners unable to sell their homes and others looking to add properties to their investment portfolio. “Buy to let” mortgages usually come with higher Kansas City mortgage rates and bigger fees. Most of the time, you will be expected to put down a larger deposit compared to other personal mortgages. Even if you choose to rent out your own home, you will need to let your mortgage provider know. In some cases, you may have to start paying a higher interest rate.
When purchasing a rental income property, putting down a larger down payment on a home can lower your Kansas City mortgage rate. If your rental fees are priced correctly, then your return on investment should be even higher with a lower interest rate. A higher return on investment can help cover unexpected maintenance costs and other tenant issues.
Every year, landlords pay more taxes on their rental income than necessary because they fail to take advantage of tax deductions. Interest is typically a landlord’s single biggest deductible expense. The most common kind of interest deduction is for monthly mortgage interest payments. The total deduction will depend on the Kansas City mortgage rate they received when obtaining financing for the property. Prepaid interest can only be deducted the year it is due, and any interest that is refunded to the borrower cannot be deducted.