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Old 02-27-2014, 11:06 AM
 
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Hello,

Can anybody throw some light on

Whether to go for 3.125% 15 yr vs 4.125% 30 yr mortgage for a rental investment property (200K worth) ? Thank you
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Old 02-27-2014, 11:27 AM
 
Location: Southern California
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If you took the 4.125% what would you do with the difference in cash? Invest it, enjoy it buy more investment properties?
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Old 02-27-2014, 05:40 PM
 
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Probably will buy more rental investment property

This is our first investment property purchase. testing waters....based on how it will go in terms of property management, tenants etc., ...might buy more
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Old 02-27-2014, 06:23 PM
 
Location: Southern California
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Taking the 4.125 will give you a lower payment and give you the ability to borrow more in the future for the next property.

The 3.125 will run you about $440 a month more but more of it is going towards principal

If you take he 4.125 but make the payment of the 3.125, you payoff the loan in 199 months versus 180, costing you about $28000 more.

I'd take the 30 year if those were my only options. You'll have about $5000 in your pocket to invest every year, or fix stuff.
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Old 02-27-2014, 06:54 PM
 
Location: Austin
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How would you get 4.125% as an investor when "regular" 30 year rates are about 4.5% with 20% down right now?
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Old 02-27-2014, 08:37 PM
 
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We are not looking for cash flow .Thinking of 20% down on rental property and build equity .Instead of cash just doing nothing in the savings account.
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Old 02-27-2014, 08:39 PM
 
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With 800+ credit score, that is the rate we have from lenders with no points
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Old 02-27-2014, 08:52 PM
 
Location: Austin
7,077 posts, read 16,885,085 times
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Quote:
Originally Posted by Luvmom611 View Post
With 800+ credit score, that is the rate we have from lenders with no points
And you were honest with telling them it was for a rental and not a primary residence? I find it very hard to believe... I have buyers buying a $700k house and only financing $200k with 820+ credit scores and are still getting 4.375%.
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Old 02-27-2014, 09:14 PM
 
Location: Southern California
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Quote:
Originally Posted by FalconheadWest View Post
"regular" 30 year rates are about 4.5% with 20% down right now?
4.5 sounds high, rates are constantly changing, I'm not quoting a rate but based on you scenario with a 800 score owner occ at below 4.25 is doable. 20% on an rental, well....

Quote:
Originally Posted by Luvmom611 View Post
We are not looking for cash flow .Thinking of 20% down on rental property and build equity .Instead of cash just doing nothing in the savings account.
To build equity you take the lowest rate, but the return on your principal is only going to be 3.125% on the money. If you don't want cash flow take a 15 year. A 15year will reduce your borrowing power for future purchases, The problem, once you put money in, it is expensive to get it back out.

I'm more of an ARM person, it gives me a low rate, doesn't hurt my borrowering power as much , and I plan to get rid of the properties.

I think of a 15 year more of a retirement plan where you put in a bunch of money and after 15 years is when you get your money back.

Last edited by thelopez2; 02-27-2014 at 10:10 PM..
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Old 03-01-2014, 09:14 AM
 
3,317 posts, read 7,251,326 times
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Quote:
Originally Posted by Luvmom611 View Post
Hello,

Can anybody throw some light on

Whether to go for 3.125% 15 yr vs 4.125% 30 yr mortgage for a rental investment property (200K worth) ? Thank you
The 15 year option will reduce your buying ability in the future. You can always pay the 30 year loan off faster, and the 30 year option will leave more room in your debt ratio for future purchase power.
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