200k Minimum For Financing?

[Patrick Rabalais]

Per the advise of some smart people here on BP, I started looking in to financing for my first rental investment. Thanks to their low barrier to entry, I started with Rocket Mortgage.

The feed back I got was to expect a 25% down payment (okay), 13-14k in additional closing costs (woah!), a mid to high 3’s interest rate (solid) and a required appraised value of 200k or greater (huh?). All properties I am looking at are in the Dallas area.

That uh, seems prohibitive. Is the 7% closing costs and a 200k required minimum value of the property common? I plan to talk to some other lenders but wanted to make sure I had my bearing straight.

[Chris Mason]

If you like Quicken, a local mortgage broker can broker it there. On the wholesale side, some combination of that 2 points, or the interest rate, will be lowered or eliminated. 

They went public in August. So now everyone can read it from them directly, you no longer have to take my word for it: their public "prospectus" disclosures revealed that about 1/3 of their business by volume comes from mortgage brokers ("partner network" is the term they use for us), but only about 10% of their net profit (rather than the 1/3 you might "expect" if everything was flat and linear and equal). They give us a discount to pass onto the consumer, on top of compensating us, as is normal approximately post-2018, as a customer acquisition cost. People calling them directly represent about 2/3 of their business, and 90% of their profit. Surcharge.