# Interest rate off investment properties

6 Replies

what is the going rate now for interest rate on investment properties? I Ran some numbers with local mortgage loan company and i was quoted 5.62% with 20% down payment on a \$150K loan.  nothing spectacular on credit report, just shy of 700. surely there are better rates out there, right? I was told because I'm sub 700, i should consider 25% down to get 5.5%.

My current commercial loans have a rate around 5.5% and they each have a original principal of less than \$100k. Commercial loans just have a higher interest rate most of the time because they are riskier for banks compared to traditional mortgages.

I personally wouldn't add another 5% down to save 0.12% interest. Most investment properties will be refinance and bundled a few times throughout their life (if you are a buy and hold investor).

Ohh and our credit score was 800+.

@David Adamolekun that a good rate in the low end of the spectrum.

Commercial rates are going between 5.5+- to 8.75+-

Compare the numbers: adding 5% to save .12% would take you 12.25 years to recuperate the extra downpayment.

20% down = \$120,000 loan. x 5.62% = \$690 a month + origination cost (2%) \$2500

25% down \$112,500 loan. x 5.50% = \$639 a month + origination cost (2%) \$2250

\$250 savings on closing cost. \$51 savings on the monthly payment (\$612 Year).

totals cost of the 5% down payment \$7750 Div by \$612 = 12.66 years to recoup the extra 5% put down because the yearly saving is minimal.

Now if you buy down interest points with your 7500 say you could get 4.62% it would take you 8.56 years to recuperate your \$7,500 and save you \$26,568.41 in the length of the 30 years.

 Loan 1 [email protected] Loan 2 [email protected] Loan 3 [email protected] Monthly Payment \$690.41 \$616.61 \$638.76 Total Payments \$248,546.79 \$221,978.38 \$229,955.70 Total Interest \$128,546.79 \$101,978.38 \$117,455.70 Pay-off Date Nov 2049 Nov 2049 Nov 2049

Interesting thought regarding buying down points. I Was hoping i could hold on to as much liquid cash as possible for the rehab. Thanks for the numbers. Helps put things in perspective.

My first Rental property in 2019

home price 70k +

credit scores 760+

25% down

no point was purchased

Interest rate

wells fargo gave me 5.7%

northpointe gave me 5.375%

if I spend 675\$ to buy point to lower down the rate (can be saved ~14\$ per month)

I choosed Northpointe Bank.

May be you can buy lender point or more down payment can reduce the interest rate.

Thanks. Got interest rates 5.62% and another 5.25% recently. Investment property I’m looking at is 75-85k with likely 10k rehab(out of pocket). Have you found significant difference in fees/closing cost attached to this loans. One lender charged me same dollar amount in closing cost for \$150k loan as  the other lender of 300k is charging.not that I need all that loan to begin with.

Appraisal fee is 400\$ different. The rest (Processing ,underwriting,Credit Report Fee,Tax service etc.)
are almost the same.Total closing 3k+ without prepaids and initial escrow payment.

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