Loan options for an investment property

[Sada Rafi]

My offer has been accepted and signed. Now, I'm looking at financing options out there and Quicken Loan has been recommended. I am working with them to finalize rates and terms, etc. I am doing a 25% down since as they said it would help lower the rate.  They have been fast in giving pre-approval and on top of it so far. I have never dealt with them and not so sure if I'm getting the best rates. I have asked other local lender with similar rates but they didn't dig deep into my info as QL did. As this is an investment property and not a primary, would anyone care to provide some advice on which loan option suites my need. I am not planning on holding on to the property long term, min 3yrs, max 6yrs.

a) 20yr fixed @ 4.50% total  costs $3100

b)  20yr fixed @ 4.625% total  costs $2700

c)  30yr fixed @ 4.875% total costs $2900

d) 30yr fixed @ 4.99% total costs $2600

thanks!

[Andrew Postell]

@Sada Rafi the rates look typical for the down payment you are looking at.  Is there a reason why you are looking at a 20 year loan?  Interest is important but since you are selling the home so quickly I might guess that you are banking on appreciation in value?  If so, just go with the 20% down option.  If appreciation is the strategy here then save your cash for other purposes (another home perhaps?).  I'm giving these recommendations without knowing your full financial picture but if there is something else that is important here just let me know.  Also, these loans don't have a prepayment penalty so if you wanted to pay off faster (for whatever reason) then you can stick with the 30 year loan and just make the 20 year payment.  That way if things got crazy in the market you would have the flexibility to go back to the 30 year loan.  In the 20 year, if the world got crazy, you would have no choices...you would always HAVE to make the higher payment.  The "difference" of interest in 3 years would be negligible but having the flexibility might be important.  I would recommend keeping your initial costs as low as possible since you will be selling the home so quickly.  Let me know if you have any other questions.  Thanks!