What is a good mortgage interest rate?

Question

Good Evening Bigger Pockets,

I am in the process of purchasing my first rental investment property and got a quote of 4.75% interest rate from Wells Fargo. Is this amount accurate in current market conditions? The primary house I purchased this year was only at 3.625%..

Any advice would be helpful!

Thank you all

Eric

Steve ONeal · Answer

Seems a tad high.  If it helps, March 2015 in CA was able to get a 30 year fixed $750k, no points, at 4% on owner occupied (one unit) in a 4 unit rental property.  Good luck!

Anna Watkins · Answer

Sounds about right -- generally you will have a higher interest rate on investment properties than on a primary -- at least that's been my experience.   Even with 20% down, if you're not going to live in it the lender figures you've got less "invested" (ha ha).   And 4.75% still isn't very high for a fixed-rate long term loan.  You might find a lower rate, and you will definitely find a higher rate, for the same property if you look around.  Good luck!

Roger Pokorny · Answer

I just closed on a 30yr fixed rate loan at 4.875% for a single family rental.  I had the option to pay down the rate to 4.5% with 2 points.  I chose the higher rate so I could keep the cash to re-invest in my next deal.  In the long run, I will earn a higher return as I can use the same cash several times over as I turn over fix and flip property.

Account Closed · Answer

Take it. A year from now you will be quite happy.

John Thedford · Answer

It is all relative. If the property will pay for itself and cash flow would it matter if you had to pay 5% or 6%. I recall back in the mid 70's when rates were around 7.5% or thereabouts and people said that was a bargain. If you had to borrow private money, you would probably pay a minimum 8% or more. Rates are at historic lows and the more you can borrow with long terms the better off you will be. Go on, take the money and RUN!

Gordon Cuffe · Answer

Investor rates are always higher than non owner mortgage rates. 15 year rates are always lower than 30 year mortgage rates. Interest rates change daily so it doesn't matter what rate someone obtained 4 months ago. Mortgage rates vary by credit score, ltv also. Don't ask people not in the mortgage rate if that rate is good. Tell your scenario to another mortgage company and you will find out that the rate is right around where current non owner rates are currently. The fed is meeting later this week so mortgage rates might change so when your ready to buy lock in your rate because we are still at historic lows. I am a mortgage broker in CA.

Max Matrin · Answer

he best mortgage rates are still at historic lows heading into 2016. According to the St. Louis Federal Reserve, average 30 year fixed mortgage rates are still under 4%. With these rates, home ownership has never been more attainable. Low mortgage rates are only one aspect of choosing a lender, but finding the best rates is the first step in whittling down your list. I’ve purchased two homes in the past five years, and can personally attest to the fact that the home buying process can be nerve-wracking, but tremendously worthwhile in the end.

Matt Holmer · Answer

Are these rates for loans in the investor's personal name or an LLC?

Jason Leaf · Answer

It's a good rate for a non-owner 4 unit property based on the current market. You really can't compare to what people got a few weeks or months ago. Interest rates can change a few times per day based on market conditions.

Rates on a 2unit would be less. Rates on a 1unit lower. Rates on a primary are also lower.

Your scenario comes with a few loan level pricing adjustments. Basically, lenders adjust rates for things they believe to be risk factors. Occupancy, property type, LTV, fico, DTI, etc.

Good luck with your purchase!

What is a good mortgage interest rate?

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