I’ve read how they just simply compare the interest rates but doesn’t the fact they charge more interest towards the earlier payments change things? hope that my question makes sense. Unfortunately I know very little about rei so I might be so confused I cannot even ask a good question. Perhaps I shouldn’t even worry about interest rates other than when i’m shopping between banks but I think it’s all the same but not the fees correct?

I think you’re talking about amortization schedules. Yes, on a fully amortized loan of say, thirty years, the payment amount stays the same for the entire thirty years (assuming a fixed interest rate), but the share of that payment at the beginning goes largely to interest. The remaining portion of the payment goes toward a pay-down of the principal (a tiny fraction in the first years of the loan).

javipa’s answer is correct but you may be overthinking it a bit. Your main concern when dealing with financing is cashflow and terms. You want to make sure you have a true amortizing loan. In other words a loan that will allow you to pay monthly for 30 years and at the end of those 360 payments you get the property free and clear. No balloons or interest only unless you have that in your strategy.

Nobody pays for an investment property for 30 years but you need to make the decision to do something different (refinance, sell, etc) because it fits your strategy, not because the financing clock has run out.

Loan amortization does affect the rate of equity. As you pay down your mortgage, your equity (the amount of the property that belongs to you) will increase. The longer the term of the loan, the slower you build up equity via loan payments. A 15 year amortization will pay off the loan quicker and more of the payment will go to principle, but the payments will be higher but not by 50%.

If you want to build equity faster, buy discounted properties, buy in depressed markets and wait for prices to recover or in some cases you can remodel the property and sell it for more than the investment.