Interest rate 6.068% too high?

[Dolly La Salle]

Hello. I plan to buy my first rental and received a pre-approval from a mortgage broker for a loan of 6.068%. I understand that the interest rate is higher when you buy an investment property, but I have really good credit so not sure why the interest rate is so high. This is affecting me from getting good cash flow deals. Every deal that I analyze gives me a negative cash flow and it's due to the high P&I and low monthly gross rent. Does anybody have any suggestions? Thank you.

[Stephanie P.]

Originally posted by @Dolly La Salle:

@Chayson D., thank you for the info. Per my loan worksheet,  the Interest Rate is 5.75% and the Annual Percentage Rate is 6.068. Yes, I got approved for a $150 loan. If I ask for a higher loan, then I will need a higher down payment. If I pay for points or have a high interest rate, that's still money coming out of my pocket. The Lender is also charging me a 5.3% of the loan amount for the Closing Cost. Does 5.3% seem normal or high?

 Dolly

5.75 is a pretty good rate for a non-owner occupied property at that loan size.  

APR and interest rate are two different things. APR has other costs involved and interest rate is just that.

Asking if 5.3% closing costs is too high is also a hard one to answer.  Are you including escrows in there? Is it an estimate or do you know what the title company is going to charge?  Are prepaids in there as well.  Too many variables to tell.  If you're asking if if 5K on a 100K loan is high, I would say no if escrows, prepaids and title charges are in there.

Stephanie