Is a 4.75 interest rate acceptable on 700 credit score?

Question

Hello people I'm. Buying my first rental property with a conventional loan in texas, a triplex I'm planning to live in one of them, I have a four year job history and a 700 credit score and the bank gave me the loan estimate, it looks like this

loan term: 25years,  product: 5.33, adjustable rate,  loan type: conventional. Rate lock: NO  And a 4.75 interest rate..

PLZ HELP I NEED ADIVCE TO PROCEED OR NOT?

Paul Forcey · Answer

I just did a cash out refinance and got APR 3.577%30 year, rate lockedCredit score 75425% equity left in I don't think your offer is good, the adjustable rate would scare me.Can you hold off and work on getting your credit score up?I would shop around as a minimum, maybe go to a broker who deals with rental properties a lot and see what they can find for you.

Colleen F. · Answer

Why aren't you using an owner occupied loan?  I would think that would be fixed rate and lower interest but I am not a loan underwriter.

Corey M. · Answer

Don't think OP mentioned an LLC, so I assumed it was in his own name. But yes, I was quoting prices in a personal name rental loan.

Corey M. · Answer

Not sure where everyone on here is getting their numbers, but I am being offered a 30 yr refi at 2.99% WITH a 6k incentive on top. That's on my primary residence.

For rental properties, I'm being offered 3.25%, 30 yr with 25% down. So the answer is, no, that is not a good rate, unless you have a high DTI.

David M. · Answer

@Sergio Zapata

A touch high, but for an investment loan that’s about right.  Investment loans are running closer to 1.5% percentage points higher than owner-occupied residential loans.  And I think they are a touch higher for multi-families...

Good luck

Steven Foster Wilson · Answer

@Sergio Zapata if you are asking in general is 4.75 a good or bad rate, id say generally its a good rate and it won't kill cashflow.

However in our current market conditions Ive seen owner occupy rentals dip in the low 3's. Comparing the two, that can be the difference of hundreds of dollars paid in interest.

Needless to say, you should shop a couple lenders.

Sergio Zapata · Answer

I was going through my 401k plan with American Funds and going through the tabs it asked me if I wanted to change my investment plan? I currently have American Funds 2045 Target Date Fund R4 wondering if its a good investment....or change it???

Patrick Ruff · Answer

loan term: 25years, product: 5.33, adjustable rate, loan type: conventional. Rate lock: NO And a 4.75 interest rate..4.75% seems high but it's a triplex so I'm guessing it's treated differently. I bought a few duplexes and they were between 4.5% and 5% so that seems right. I would definitely try to reach out to other lenders since you take a hard credit hit anyway so you might as well know better. Single-family properties seemed to have a lower rate (I have been able to get a rate of 3.625% on one of them whereas a multifamily in the same area was 4.1% or something like that). Also my credit is slightly above 800 so if you're doing something wrong than I'm definitely doing something wrong!

Steven Foster Wilson · Answer

@Corey M. personal residences have been even lower ive seen as low as 2.7 on a 30 year fixed.

However for investments put into an llc with 20% down I have not seen anything lower then 4%. Are you looking at an investment loan in your personal name or do you have some really good connections?

Is a 4.75 interest rate acceptable on 700 credit score?

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