Looking for lowest rate-is an ARM an option?

Question

I have a rental condo in Denver that I need to do either a cashout refi or some kind of delayed financing on. Calling around, most people are quoting ARM rates at higher than a 30yr fixed. I really need to get into the upper to mid 6%. Is this possible with an Arm?

thanks.

AJ Wong · Answer

Condo and cash out will 'hurt' pricing for any lender. In general ARM's are pricing less aggressively than fixed rate loans. Is it a payment target you're aiming for? You could try an interest only option. 30 years fixed. First 10 years I/O and fully amortized for 20 years thereafter..

If it's full income verification, strong credit and a lower LTV you should be able to get there with a mild buy down..Check in with @Joseph Chiofalo for a quick second look. He just helped an investor with a lower LTV on a cash out seven plex reach the low 7%'s and that's a much more difficult loan..

Good luck!

Dave Skow · Answer

@Ben Russell- thanks ..ARM rates are definitely higher / worse than fixed rate options  ( especially on invst properties ) ...Use the  30 yr fixed option and make sure you have the delayed financing aspect figured out ....no way you will be able to get mid  6% range at this time

Marcus R. · Answer

@Ben Russell - Try the local credit unions like ENT, Bellco, or Canvas

Ben Russell · Answer

Thanks for the info. Doesn't sound like arms are an option now.

Robin Simon · Answer

Its certainly possible to get into the upper/mid sixes depending on the qualifying factors but can also say that the rate benefit to ARMs right now are very paltry - probably 1/8 or 12.5 bps (only 0.125% lower) at best

Erik Estrada · Answer

The rate will depend on the type of loan, LTV, credit, and occupancy. Is this your primary? If so you can expect a rate in the 6s with a permanent buy down. Otherwise you are looking at mid to high 7s at par

If this is an investment property, you can achieve a rate in the high 6s on a DSCR based loan with a low LTV, high fico, high prepayment penalty period.

Steven Lee · Answer

Ben,

Interest rate on ARM are always going to be higher, but your payment will always be lower. You can talk to 20 people and you will get the same answer from everyone if they are being upfront with you.

Ben Russell · Answer

Just 2 stories (garden level and 1 unit above)  probably looking to finance around 150k.

Joseph Chiofalo · Answer

Hi Ben,

Is this a low or high rise condo?  How many stories are in the building ?

How much were you looking to borrow against the property ?

Looking for lowest rate-is an ARM an option?

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