New Financing Question

[Jay Holder]

Hi I received the below lender letter from a lender I am working with. My question as this is my first investment is if below are good terms.  It is for a triplex that is fully rented out.  It has rent of $2025 a month being paid.  The monthly payment is not very high so that makes it look good but not sure on the points what those are and the amount I will pay on those.  Also, beings this is a rental property would you go with an umbrella insurance policy? With the umbrella does that cover home insurance or would I need to acquire that as well?

Property Type: 2-4 Unit Residential

Loan Purpose: Buy and Hold

Purchase Price: $130,000.00

Loan Amount: $130,000.00

Monthly Payment: $658.69

Closing Cost: $5,820.00

Interest Rate: 4.59%

Points: 3pts

Lien Holder: 1st Lien

Loan Term: 360 Months

Closing Date: 12/28/2022

Payment Option: Interest Only Payment Option

No Pre Payment-Penalty

Any and all information to help me close this first deal would be great.

[Caroline Gerardo]

Three points is $3900. 100% financing at that rate non owner is far far cheaper than what is out there.

This is not a 30 year fixed rate loan quote. Payment would be $824 plus taxes and insurance of $350. like 1174

If you don't get hazard insurance and ANY damages happen, you lose. If is any normal lender they make you have hazard insurance.

With a 100% loan to value typically there is mortgage insurance which might cost another $240 monthly.

Another thing that seems far from real is that a $130000 property has rental income of $2025. Get the leases, 12 months bank statements from seller showing they are paying, survey what rents are advertised in the neighborhood for similar bedroom and bath count, square footage, and 4 plex not single family.

You say you want to refinance soon after when you believe rates will fall.. BUT can you qualify with IRS taxes, FICO, prior history to be able to refinance when the time comes? There is no promise rates will fall at any time ahead, that's a gamble and the three points then wasted money.