Help with first Rental Mortgage in South Carolina??

[Mary Davidson]

Hello all,

We are in the process of buying our first rental property and I am a little discouraged. We just got our mortgage to sign from the lender my realtor recommended and they are charging us a 6.625% interest rate and a 7.055% APR. For the first time I am hearing that mortgages for investment properties have higher interest rates...?!? Never heard that before. Then in checking with another lender he says that because our mortgage is going to be a "small" amount (70K) there are all these adjustments ?!? (basically it's going to cost us more). Does anyone know of any lenders you can recommend who aren't going to charge me a 7+% interest rate for this situation?

Thanks in advance!

Mary

[Kevin Luttrell]

@Mary Davidson Yes investment property rates are higher than primary residence rates. And yes many lenders have pricing adjustments for smaller loan amounts. Lenders make money based on loan size - the bigger the loan, the more money they make originating it. Sometimes the profit on smaller loan amounts isn't worth the lender's time (when factoring in all that goes in to the loan process and paying the originator, processor, underwriter, etc) so they will have a minimum loan amount and/or added pricing adjustments for smaller loans. 

This is the case with many lenders, but not all. Usually I recommend reaching out to a local community bank or credit union for small balances like these.