Mortgage Interest Rate and Points

[Stuart Cairns]

Scores above 780, 25% downpayment. 2 investors. What is today's interest rate for an investment triplex and would points be expected to be paid.

[Andrew Freed]

@Stuart Cairns - This is completely a lender question. You should identify a couple local lenders (small local credits unions and banks) and call around. Obtaining rate information from BP is probably not the best approach, go to a local lender doing this day in and out. 

[Stuart Cairns]

Thanks Andrew. Due to a time constraint before closing, I was hoping to get a broad-based answer, from an experienced investor. I requested an interest rate and payment which I was happy with but then I was surprised with points which were not discussed.

I feel that approximate rate and realistic point fee is not impossible to discuss. If you were buying today, as an investor how would you know what is a reasonable expectation for a lender through experience rather than calling a bunch of lenders.

Do we have rules we can typically appl. Avg bankrate is 5%, is an investor loan typically 1% higher?
Is it more than 1%?
Is an investor expected to pay points based on that %age?
Doesn't need to be exact just principles over time based on current homeowner rate.

[Robin Simon]

Quote from @Stuart Cairns:

Scores above 780, 25% downpayment. 2 investors. What is today's interest rate for an investment triplex and would points be expected to be paid.

if you are looking at DSCR, ballpark I would imagine somewhere in the 7s range - will also highly depend on DSCR, prepayment and a couple of other factors, more here:

DSCR Loans: What Are They And How To Get The Best Terms

https://www.biggerpockets.com/...

DSCR Loans: How To Use Pro Strategies To Save More And Make More

https://www.biggerpockets.com/...

Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?

https://www.biggerpockets.com/...

12 Frequently Asked Questions (And Answers) About DSCR Loans

https://www.biggerpockets.com/...

[Kristen L Garner]

Hi Stuart! What is the purchase price? Is this DSCR or conventional? If DSCR, what is the rental amount or DSCR ratio?

[Stuart Cairns]

Quote from @Robin Simon:

Quote from @Stuart Cairns:

Scores above 780, 25% downpayment. 2 investors. What is today's interest rate for an investment triplex and would points be expected to be paid.

if you are looking at DSCR, ballpark I would imagine somewhere in the 7s range - will also highly depend on DSCR, prepayment and a couple of other factors, more here:

DSCR Loans: What Are They And How To Get The Best Terms

https://www.biggerpockets.com/...

DSCR Loans: How To Use Pro Strategies To Save More And Make More

https://www.biggerpockets.com/...

Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?

https://www.biggerpockets.com/...

12 Frequently Asked Questions (And Answers) About DSCR Loans

https://www.biggerpockets.com/...

[Stuart Cairns]

Hi Robin
It is not DSCR. The rents are far below market value and even brought into line which the tenants are aware of. No increase in 10 years. We are aware that this property is not going to start with a big cash flow, but it is a very well kept building with really clean tenants. My issue is that I asked for a rate and payment. I was told 7% and payment with 25% down.
Only when I was in contract was I told the quote of 7% was also including 2 points.

I am not usually travelling, in fact rarely, but I have two trips out of the country which leaves me just a few days between now and closing. 
I am not looking to pay points as I am hoping to refinance at a better rate if they drop due to the upcoming election.
Before I go back to the lender, I am looking for more information on what is a realistic expectation that I should be expecting.

[Stuart Cairns]

Quote from @Kristen L Garner:

Hi Stuart! What is the purchase price? Is this DSCR or conventional? If DSCR, what is the rental amount or DSCR ratio?

Contract is $325 000 with 25% down. 

[Larry Brewer]

I'm not sure anyone can quote a rate without more details. Rates are based on several factors, not just a few. But if you want a ballpark rate,

75% LTV between 8--11%

hope this helps.

[Doug Smith]

I just snapped the below shot from "Mortgage News Daily", which shows the National Average right now for an owner-occupied 30-year fixed rate loan. The average is 6.95% with some lenders a bit above and below that mark. Any investment property is going to require more down payment and it will have a risk premium on the rate. Fannie and Freddie have really started to shy away from funding investment property, so they've jacked up the rates to where it's almost better to go with a private or Non-QM deal. Rates for rental property like you describe are going to run 7.5% to 8.5% with 1.5% - 3% in points depending upon the lender. I'm not aware of anyone with a 5% rate for that type of property, but if they are out there, I would love to use them for my customers. Good luck on your project!

[Kristen L Garner]

Quote from @Stuart Cairns:

Quote from @Kristen L Garner:

Hi Stuart! What is the purchase price? Is this DSCR or conventional? If DSCR, what is the rental amount or DSCR ratio?

Contract is $325 000 with 25% down. 

Are you using DSCR/nonQM lending (qualifying based on assets) or conventional lending (qualifying based on conforming standards, debt to income ratio, etc)?

[Stacy Raskin]

What city, state is the property in?

[Nicholas Covington]

If its not going to debt service then you will likely need a hard money loan to buy the property. That will go for around 10-13% and expect to pay points. That is how most people get paid and also offset some of the risk and pay the originators.

[Caroline Gerardo]

Full documentation, full 2 years income taxes qualified mortgage, you have the down and costs and 12 months reserves in checking account past sixty days, property can be rented at closing, you provide lease and deposit check at closing. FICO mortgage middle for both is 780, your DTI is less than 43 for both of you. You say it doesn't cash flow, which still means the debt to income ratio has to be 43 to get this today.

30 year fixed 7.25% with .5% point  No zero points is available for non owner triplex, not anywhere. All lenders fear early payoff today. This is a conventional loan. 

Owner occupied is NOT 5 percent - hasn't been there for months, it's in the 6.75 - 7 range

This is NOT a rate commitment This is not a commitment to lend. I don't know if you qualify for it or not. Rates change a couple times a day. You need a full application in to lock. 7% with 2 points isn't terrible, and I don't know really what your ins and outs are.

[Stacy Raskin]

Nobody is doing 5% DSCR or owner occupied loan rate right now. Bankrate is most likely quoting significant discount points such as $20-40k in discount points for an investment property loan to get to 5% for an 800 credit score and a larger down payment.

7-8% is more likely for a DSCR loan depending on credit, LTV, rents etc.