A mortgage rate question: (Raleigh, Star: rental, mortgage broker, credit)

[helenocean]

We own a house in Raleigh. If we plan to buy a townhouse as a rental investment, suppose current rate for 30-yr-fixed is 6.25%, what the mortgage rate can be for this the secondary house? Will it be much higher? Anybody can give me some ideas? Thanks!

[MikeJaquish]

Originally Posted by helenocean

We own a house in Raleigh. If we plan to buy a townhouse as a rental investment, suppose current rate for 30-yr-fixed is 6.25%, what the mortgage rate can be for this the secondary house? Will it be much higher? Anybody can give me some ideas? Thanks!

You need to talk to a mortgage pro, to help you determine this.
They should talk to you for free without pressure. Start where you bank.

We can all guess, but we would need more of your personal confidential information than you should offer in a public forum.

And it depends on the type of unit, how much you are putting down, your personal credit, and bill paying history.

[xiaoyue]

Usually 0.5% higher than regular mortgage.

[TimtheGuy]

Or, you can get the going rate on a 30 yr. fixed PLUS 1.5-2.5 additional points depending on how much you put down.

[aperionvi]

I am looking for an investment property as well. I just got off the phone with my mortgage broker and the builder broker. They both came back to me with the same Rate.

10% down - LTV = 90% the rate is 7.75% for a 30yr Fixed, No points

if you have an LTV = 25%, the rate is 7.125% for a 30yr fixed, No points

The 30yr Fixed IO's are in the 8-8.675% range.

It hurts so much because there are so many more investors in the market for homes now, but the rates are not attractive at all.

[saturnfan]

Investor loans carry more risk since you don't lose your home if you walk away.

[TimtheGuy]

Originally Posted by aperionvi

I am looking for an investment property as well. I just got off the phone with my mortgage broker and the builder broker. They both came back to me with the same Rate.

10% down - LTV = 90% the rate is 7.75% for a 30yr Fixed, No points

if you have an LTV = 25%, the rate is 7.125% for a 30yr fixed, No points

The 30yr Fixed IO's are in the 8-8.675% range.

It hurts so much because there are so many more investors in the market for homes now, but the rates are not attractive at all.

What is not attractive about those rates?? Do you expect them to be 5% or what? Pay a little in fees and you are in the 6's. That is pretty darn attractive for investment property.

To me that is like people who says interest rates are up/high, when a 30 yr fixed is at 6.25%. Great rates if you ask me.

There is more risk when financing investment property, so it costs a little more.

[DanielChang]

Originally Posted by TimtheGuy

What is not attractive about those rates?? Do you expect them to be 5% or what? Pay a little in fees and you are in the 6's. That is pretty darn attractive for investment property.

To me that is like people who says interest rates are up/high, when a 30 yr fixed is at 6.25%. Great rates if you ask me.

There is more risk when financing investment property, so it costs a little more.

What a sharp contrast compared to 6 months ago ... I believe I was quoted 6.375% no-point at 75 LTV from my broker in March.

[aperionvi]

Yep, I locked in at 6.875% in June.

1% is a lot even on a 132k mortgage + you have to pay on your second if your are doing a 80-10-10

[DanielChang]

Any little bit in terms of interest rate will affect your cash flow for the investment rental property, especially in the Raleigh market where the margins are pretty slim, even if you finance at 80 LTV or 75 LTV.

And the least out-of-pocket in terms of points/fees/closing costs, the more you have for your down payment or cash in your pocket to do something else.