If you've been considering buying real estate in Orange Beach, Alabama, for investment reasons, you're on the right track. Despite being an affluent area with impressive amenities and many golfing opportunities, it remains budget-friendly. According to Investopedia, while the median home prices here are higher than the U.S. average ($709,385 vs. $420,400), you can still find quality homes within the $300,000 price range.
Remember, though, that those prices exclude mortgage rates. For this reason, it's imperative to establish a budget that includes mortgage costs. Otherwise, you may find yourself having trouble repaying your loan.
Read on as PMI Integrity Properties has shared insights into Orange Beach real estate investments and mortgage rate predictions.
Understanding Mortgage Rates for Investment Properties
As Smart Asset explains, mortgage rates for real estate investments are often higher than primary home financing costs. The difference is due to lenders' perception that investment properties carry more risk, such as rental income volatility and increased risk of default. As a result, they usually charge 0.5% to 1% more than traditional mortgage rates.
Current Traditional Mortgage Rates in Orange Beach, AL
At the time of this writing, Realtor placed the average mortgage rates in Orange Beach, AL, at:
- 6.81% for a 30-year fixed-rate loan
- 5.81% for 15-year fixed-rate loan
- 6.67% for a 5-year adjustable-rate loan
To estimate the average rates for investment properties, add 0.5% to 1% to the figures above. For example, a 30-year fixed-rate mortgage for an investment vacation rental property could be around 7.3% to 7.81%.
Which Type of Mortgage Should You Get?
If you want predictable mortgage rates and payments, go for a fixed-term mortgage. However, you should explore adjustable-rate mortgages if you can repay the mortgage loan within a few years. ARM lenders often offer significantly lower introductory rates in the first few years.
Savvy Strategies for Securing Great Mortgage Rates
If you've been waiting for mortgage rates to drop further, you may have to wait longer. If economic data weakens, mortgage rates might drop in 2025, but in CNET's words, it is a "big if." And even if they go down, it may not be as significant as you hope for.
In the meantime, you could already generate income if you have an occupied rental property. So, rather than waiting for something that may not happen anytime soon, consider financing the purchase of an investment property in one of Orange Beach's up-and-coming neighborhoods. Besides, by following these tips, you could snag a great mortgage rate:
- Improve your credit score
- Review your credit report and file corrections for any errors
- Demonstrate to lenders that you've saved up a sizeable down payment of at least 20%
Don't forget to conduct thorough mortgage rate comparisons. Lenders have varying risk criteria, so one may find your investment to be lower risk than others, giving you a lower interest rate.
Need More Help Finding the Best Mortgage Rates?
If so, then PMI Integrity Properties will be happy to help. Our full-service property management company, comprised of a team of real estate professionals with decades of combined experience, specializes in brokerage services. Not only can we assist you in finding your dream investment properties in Orange Beach, AL, but we can also help you navigate mortgage rates and find lenders that offer the best rates for your needs and preferences.
Speak with us today to get started on your complimentary property consultation!
