I am looking to buy my first investment property. A 3 units multifamily at 420K, brings in over $3700/month. I got 5.99 as a rate for a 30 years mortgage. Should I shop around or is this a good rate? I have a credit score above 760.
Highly recommend calling @Diana Muresan . Rate seems a bit too high and I think you could work your angle differently.
Have worked with Diana and highly recommend. She is licensed to lend in all 50 states.
Agree with @Justin Kane completely and I would second that motion. House hack this one for sure. The amount you will save going conventional will save you thousands in the long run and increase your cash flow.
By the way, great job with this find. Great opportunity and you will smash it out of the ballpark I have NO DOUBT!
Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes
7y
@Najat F Kessler I am guessing investment property right? 25% down? I am seeing 5.50% today but that depends on the rest of the details like down payment, lock period, etc.
Specialist · San Antonio, TX · Member since 2015 · 909 posts · 297 votes
7y
I would recommend house hacking and making this a primary residence allowing you to get federal backed owner occupied loans which could cover up to 100% however if this is not an option and having this as a investment property then you will need to shop more lenders to see if there are better rates and terms for you but generally 25% down at 6% is typical of this market.. but if the numbers work dont let analysis paralysis keep you from a potentially good deal. just MAKE SURE the number really work.. even in a bear market
Highly recommend calling @Diana Muresan . Rate seems a bit too high and I think you could work your angle differently.
Have worked with Diana and highly recommend. She is licensed to lend in all 50 states.
Agree with @Justin Kane completely and I would second that motion. House hack this one for sure. The amount you will save going conventional will save you thousands in the long run and increase your cash flow.
By the way, great job with this find. Great opportunity and you will smash it out of the ballpark I have NO DOUBT!
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
7y
@Najat F Kessler even if your rate is good YOU SHOULD STILL SHOP. Always get multiple quotes on things like this. Even a small difference can equal tens of thousands of dollars on the loan. I will say that some states carry different rates. So I couldn't tell what state you are in but maybe 6% is reasonable where you are. Likewise, I can't tell what fees you are being charged. So being charged $500 in lender fees might be reasonable as well. Some lenders charge about 1% on their fees? Some do. Some don't. So while the rate is important, so are the fees too. Get a fee worksheet from your lenders and compare them side by side. That way you can see the ALL the details.
I would also suggest asking a couple of questions here too:
When do you start using rental income to help me qualify? (the answer needs to be immediately)
How long does it take you to close?
So if it takes a bank 90 days to close....maybe that lower rate isn't worth it. Hope this helps!
Buy and Hold Investor · Cranston, RI · Member since 2013 · 1k+ posts · 1k+ votes
7y
@Najat F Kessler I don't know what your overall financial situation looks like but that's definitely on the high side from what I'm seeing myself. I'm seeing in the low 5s for a 3-family investment property I'm going to close on next week (the rate was locked in mid December). And I'm in your state (Rhode Island).
As others in this thread have noted, it's absolutely a good idea to shop around. At the very least you should get two quotes so that you can have the two compete against each other. You'd be surprised, very often they can shave off 1/8th (0.125%) just to be sure to get the loan when they know you're otherwise going to go to a competitor.
Rental Property Investor · East Providence, RI · Member since 2018 · 1k+ posts · 1k+ votes
7y
@Najat F Kessler
Hi. I have a bunch of investment real estate in Rhode Island and not at 6%. I would shop around a little more. Especially with that good credit score. What bank? And as you asked Anthony, I am part of the local reia. I actually help run it.
Buy and Hold Investor · Cranston, RI · Member since 2013 · 1k+ posts · 1k+ votes
7y
@Najat F Kessler yes I am in the one that meets monthly in Warwick. I don't help run it (though you might think so given how often I recommend people attend), but I have been a member since 2003 and have presented there a number of times over the years. Hopefully I'll see you at the February meeting, if so please be sure to say hello!
So delighted you are both in RI. Thank you very much for your input, I am planning to attend the February Meeting and I am certainly excited to meet both of you there.
@Najat F Kessler. I have a 4plex in Austin under contract currently for 5%, no points, no origination fee from Redfin Mortgage company. Purchase price at $460k
Rental Property Investor · Providence, RI · Member since 2015 · 1k+ posts · 594 votes
7y
@Najat F Kessler I am here in RI also. I would definitely shop around. Once you establish a relationship with one bank, it exponentially eases the process moving forward. Find the right overall fit.
Buy and Hold Investor · Cranston, RI · Member since 2013 · 1k+ posts · 1k+ votes
7y
@Najat F Kessler I looked over your CD and nothing really jumps out as unusual. Often the lender breaks out the origination charges a bit instead of lumping it all into Underwriting Fee but the overall amount looks OK.
I thought the appraisal was high but then remembered it was a 3-family so that looks OK.
The main thing is that when you're talking to multiple lenders, you make sure that you get all the origination charges in addition to the interest rate.
If one option is a mortgage broker who has her/his own origination charge, but a lower overall interest rate, then you absolutely need to find out how much that charge is and factor it into your analysis.
Usually it makes sense to do it for the lower rate if you're going to hold onto the property for more than a few years, but it's a choice you should consciously make.
Paying a mortgage broker fee for a lower rate is not unlike paying points to buy down the rate. It's perfectly fine to do so, just make sure you understand what you're getting for the fee.
I only mention all this because on a recent transaction I was talking with multiple lenders, one of whom was a mortgage broker, and getting him to tell me his fee (as loan broker) was like pulling teeth. He kept saying "all the usual fees" and I had to ask, explicitly, 3 times before he would finally tell me what his company was getting paid for my doing the loan through him. He was pissed I was asking to find out his fee, and I was pissed I had to ask 3 times to get a simple answer. And in the end, his wasn't the best mortgage option anyway so I gladly chose someone else.
But the CD you posted looks fine to me (other than the interest rate, which we've already discussed). Good luck with this one and let us know how it goes once you close!
Im under contract now for a 4 family in NY Upstate NY. Is all banks at 25% down on non-occ investment property's? Was only looking to put down only 20%.