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

@David Adamolekun

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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