7.8% Fixed, No MI, 10% Down, 2 Points

On a douplex I'm purchasing for $82.5k. What do you think? Does this sound reasonable or do I keep looking? Seems a little high to me (FICO 690-710).

I've also been offered:
8.3% fixed, no MI, 10% Down, 1Point
9.05% fixed, no MI, 10% Down, 0 Points
6.75% ARM, no MI, 10% Down, 2 Points

But I've only done a very preliminary search so far.
[ Edited by alexlev on Date 06/08/2004 ]

Comments(18)

  • alexlev8th June, 2004

    Sorry, should have been clearer on that. These are all 30yr mortgages.

  • InActive_Account8th June, 2004

    are we allowed to give specific info here? I just got for non owner occupied 6.25%, 25% down, approx. $1000 costs, no points/orig fee/commitment fee/app fee, etc., for a property at the same approx. purchase price and I know the lender also covers NY

  • BMan8th June, 2004

    Is that on a 30 yr fixed loan? There is a huge difference in the eyes of lenders between 75% LTV and 90% LTV........6.25% on a NOO 30 yr note is a great rate..........

  • tonygeorge8th June, 2004

    If your going conforming epecially with your scores you want a 80/10/10
    so that you won't have mortgage insurance. the rate at 7% for a noo
    is pretty fair. good luck grin

  • alexlev15th June, 2004

    Thanks for your comments everyone. I followed BMan's advice and asked if it might be possible to buy down the interest rate. Sure enough, it is. The mortgage company agreed to lowed the interest rate .35% for every additional point paid at closing, up to a maximum of two additional points. The mortgage could then look like this:

    7.1% Fixed, No MI, 10% down, 4 Points.

    I figure it'll take about 3 1/2 years to recoup the additional points, but since this is something I'm planning on holding long term, it might be worthwhile paying it down. Although the difference in monthly payments is only about $40, so maybe it isn't worth the bother.

    Hmm, what do you think?

  • jeff1200216th June, 2004

    cjmazur,
    I didn't see that anywhere. Are you psychic?

  • webuyproperties16th June, 2004

    I just received a 3 year arm from US Bank. The rate is 5.3%. It is a non ratio program, 70% LTV, cash out and of course for an investment property.
    We could have gone higher LTV though the rate would have gone up a little bit....
    So, yes I believe those rates are high for a purchase

  • jmBROKEr16th June, 2004

    I'm going to have to disagree. As someone stated above, there is a huge difference between 70% ltv and 90% ltv, especially on NOO props. Also there is a big difference between a 3yr arm and a 30 yr fix. Can this person get a better rate, yes if goes w/ an arm or lower ltv. But for what he was quoted, 30yr fix 90% ltv, the rates are good.

  • Bruce16th June, 2004

    Hey,

    I may just be stupid, but anyone who is getting an ARM for a long term rental property is just asking for trouble.

  • alexlev16th June, 2004

    This is going to be an NOO mortgage. Also I agree, there is a big difference between a 3 yr ARM and a 30 yr fixed mortgage. And there is also a big difference between 70% LTV and 90% LTV.

    So my question at this point, is whether you think it makes sense for me to pay down the interest rate?

    Thanks all.

  • jgasdaglis17th June, 2004

    I am a broker in California.

    The extra points to buy down the rate on a loan for $74,250 doesnt realy make a big difference.

    What make a difference is that you are getting reemed on the rate to begin with. I know that rates and fees vary from state to state, but I would price that out at 7.375 at two points to begin with. I am assuming you are doing a full doc loan. Not a stated at that LTV. The only thing is your scores should be 720 on the middle of the three. Try to pay of some of you high balance credit cards to improve your scores.

    I would do some shopping if I were you and don't run your credit each time. Get this guy to give you a copy of your report and give it to the next guy.

    Good luck!

  • alexlev18th June, 2004

    Thanks jgasdaglis. This is a full doc loan. But I'm also purchasing another property at the same time and they will be my fifth and six properties. As I understand it, all banks are more than happy to finance the fifth property, but a far smaller number are interested in financing the sixth. And the interest rate I'm being offered on the sixth property is 8.1%.

  • jgasdaglis20th June, 2004

    Well that changes thing a bit.

    But, how does the bank now that you are currently purchasing a fifth and sixth.

    Submit application with different banks, then close them together. You don't own the fifth yet so there for each lender is financing you on the "fifth" property. It is after that, that the lender will have a hard time. And out here we allow up to 7 properties.

    Have you tried Wells Fargo?

  • NewKidinTown20th June, 2004

    Odd you would say that. I always thought it was a function of your financial strength and ability to comfortably service the debt.

    I'm closing on my 11th and 12th rentals later this year and I was quoted 4.5% on an option ARM for both properties. I am going stated income, no doc, on 55% LTV. Washington Mutual seems to be willing to fund all my deals up to 20 properties, or $2 million in loans whichever comes first.

  • rmdane200020th June, 2004

    Just did a 3 yr arm at 6.8% on $145,000 duplex with average FICO 710s and wifes 740s, no points, about $700 in closing costs. Wasn't a bad program. 90% LTV, with no MI, non-OO, and no sourcing of funds wink

  • Lufos20th June, 2004

    Stay at long term payment plans. At least 20 years and 30 is better. This really depends on your projected payment habits. Do you make small overpays on each payment? If so get out your calculator and start playing the what if game on principel payments made during the life of the loan.

    If this accumulation of property is part of a retirement plan, then make small little overpayments to reduce your outstanding principle balance, cause that makes some really goody changes in the latter days of the loan.

    Plan ahead, the market changes upcoming due to the long period of credit card stimulation are reaching the point of fail, so my suggestion is all increases in rental rate should be passed on in payments on mortgages thus reducing the unpaid balance. Big help if you are forced into a future refinance, or if you are just grinding out to retirement. Nice to have a pay in full dae prior to full term on a mortgage.

    Good luck, yours seems to be the long game but believe me and all my ex wives it pays off.

    Lucius

  • mcq22nd June, 2004

    I will be closing on a duplex(237,500) , with 20% down on an arm at 5.75%. I did pay 1 point to get it there. I did have 30 year fixed at 6.75 no points, it is also a NOO. I went with the arm because of a 4 year flip on property. I would look at what you plan to do with the property, your getting great advice so far, your rate is to high.

  • jgasdaglis24th June, 2004

    To NewKidInTown, The key word in you statement is that your LTV is 55%.

    And yes there are lenders that have great exceptions to the rule. But, at 90% the picture changes.

    Downey Savings will do 70% on investor all day long, but they two have a limit, that they will only carry 7 contracts per borrower due to the risk of that one individual filing a BK or getting into trouble.

Add Comment

Login To Comment