Buy an investment property without paying higher interest rate?

[Jason Flint]

I wanted to post this because I don't think a very high percentage of investors are aware of an option they have to get a much lower interest rate when they buy or refinance investment properties. (We have been investing for 15 years and just recently found out about this).  We recently refinanced 5 investment properties using Freddie Mac's Loan-Level Price Adjustments.  Long story short, using Freddie Mac....or Fannie Mae....you can choose to pay a fee of 2.125% of the loan and receive the same interest rate as you would if you were buying the property owner occupied.  So we now have a 2.99% interest rate across the board on our rental properties.  This is NOT an option that should be used with all....or even most purchase/refinances of investment properties.  However, if you are going to keep the property longer than 3.5 years, then the math and the benefit of paying the 2.125% fee work heavily in your favor. (We pretty much just Buy and Hold).  We refinanced the 5 properties, pulled out $110,000 in equity to buy more property, and STILL increased our monthly cash flow by more than 75%.  We have since purchased 2 more properties at 2.99% with each property cash flowing more than $600/month.  Paying the 2.125% fee to get the lower interest rate was a no brainer for us because we will most likely keep all our properties forever and pass down to our children.  Another benefit of getting the 2.99% interest rate is that we no longer feel a big sense of urgency to pay the properties off, as the monthly principal and interest we pay is so low that it's not a huge benefit to have the properties paid off.  I just wanted to post this information because as I was shopping mortgage lenders to do our refinance, NOT ONE even knew about this Freddie Mac or Fannie Mae option.....so I figured if mortgage lenders don't know about it, then many investors probably don't either!!    Good luck!!