What kind of rates are you seeing for 2 unit Duplex?

Question

I been shopping around for the past 2 weeks and the best I have seen out here in my local market Los Angeles is 5.875% 30 year conventional fixed (25% down) with 1.25 points for a 2 unit investment loan duplex? A lot of the loan brokers I have use or used in the past been so flakey and some even unresponsive. Let me know if you guys are hearing anything much better or recommendations/referrals?

Chris Mason · Answer

You're seeing folks being flaky because you're wasting time.

We are in a rising rate environment. If you're taking 2 weeks to "shop around," all that means is that whomever quoted you honestly two weeks ago is the winner, because rates were lower two weeks ago, not because of anything else. You aren't even in escrow, you're just a window shopper, to be frank.

The way to get the lowest rate and fees, right now, is to go into contract ASAP. Every day you wait, rates are going up, and the spread between this week and that week is significantly larger than the spread between any random couple of lenders.

Focus on what matters - getting into contract as soon as possible. The sooner you do that, the better a deal you will get on the mortgage, automatically. And, more than likely, you get ahead of some California COVID appreciation as well.

Conner Olsen · Answer

I've seen rates in the low 6's so I'd lock it in.

Rick Borgo · Answer

Hi David,

I have 5.625% available for 1 point. 30 yr fixed. 2 unit investment property.

Chris Mason · Answer

But it doesn't take two weeks to get preapproved. It takes a couple days. Very straightforward a->z process. And due to everyone increasing capacity to deal with the refi boom (the steps to start a refi, and the steps to get preapproved, are essentially identical, improvements in one area automatically carry over to the other), it's probably more straightforward, easier, more automated, etc, than it was in 2019 (my pre-covid "tech stack" that was more or less 2012ish technology that was "good enough" and "the way it's always been done," has been entirely replaced, for example, because we suddenly had to deal with 5x the volume, and moving to current technology was cheaper than hiring 5-10 new people).

In general, loan originators are being more responsive right now, not less. Volumes are low because the refi boom is over. If multiple loan officers are being flaky and non-responsive, at a moment when on average they/we are being more responsive, the common denominator one way or another is you. Again, just being blunt here.

It's also possible that you rolled the dice and random chance has them coming up snake eyes over and over and over again. Improbable things happen, not necessarily the fault of the person rolling the dice.

David P. · Answer

Thanks that is what i ended up getting too. Another place offerred 5.5% with 1 point but I stayed with the agents preferred lender that could only get me to 5.625 with 1 pt.

Erik Estrada · Answer

I am sorry about your experience with flaky brokers. It happens all the time and it is very unfortunate. I am licensed in California. Let me know if you would like another quote.

Kyle Deutschmann · Answer

If you fully intend to rent it out and obtain a mortgage for a primary residence then you are committing mortgage fraud. I wouldn’t personally risk that to save a couple hundred dollars a month.

Nick Belsky · Answer

@David P.

If interest rate alone is what is determining a good deal from a bad one, then you are already losing.  While rate is undeniably important it is not the most important parameter of a loan.  There's a lot of crap a lender can throw into terms on loans to offer a "good" rate.  The American culture is taught lowest rate = Best Loan from birth, but it is fundamentally incorrect and grossly one sided.

We've all been seeing a lot of lenders adjusting guidelines and terms around in response to the market shifts.  They are adding in some major terms that make these "low" interest rate loans not ideal to the average investor when you really dissect them.  The ultimate argument here is the current rates are still not high... comparing to historical trends in the past.  Everyone has gotten spoiled on a 2-3 year drop in rate form where they were 4 years ago and before.  Investors made the numbers work when fixed rates were 10%+ and guess what?  They will continue to make them work now, as many are already doing, without getting crap loans.

Cheers!

Nathan Grabau · Answer

If you have a way to make sure you are not defrauding the bank, and make it your primary that seems advantageous. If you ask for an investment loan product though, and a lender gives you back a primary residence rate, run. They did not listen to you or intend to bait and switch you into a more expensive product.

I would also say in response to an earlier post you made if a 0.5-1% change in your rate is the difference between you thinking a deal is a good deal or a bad deal, the deal is a bad deal or you need to adjust your expectations to focus longer term.

What kind of rates are you seeing for 2 unit Duplex?

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