How to get lower investor loan in this market ?

Question

Hi Memphis Fam,

What are the key strategies to lower your investment loan in this market ? I got quoted ~7% and want to lower that at lease couple upcoming years.

I am open to all ideas.

Thanks,

Orhi

Jason Wray · Answer

Depending on your LTV 7% is not that bad for an investment property. If your LTV is under 70% rates are in the 6's with good to excellent credit. The other thing to keep in mind is you can do a rate buy down using the equity to cover the buy down fee. You also want to make sure you are not paying multiple points for that 7% rate.

Dave Skow · Answer

@Orhi Tahi- this is a good rate in the current market for a rental property loan ( assuming its a 30 yr fixed and that you arent paying a ton of points )

Dave Skow · Answer

@Orhi Tahi- thanks 1) consider a shorter term loan 2) consider paying a larger loan fee ....3) a 7% rate for an inv property is excellent ( esp if its a 30 yr fixed)

Melissa Maw · Answer

if 7% is the par rate they are giving you without paying points at 80% LTV for an investment loan, then that's a really good rate. In fact, I usually see rates in the 7s for primary residence.

Derek Brickley · Answer

Hey Orhi! There are really only a few ways to lower your quoted rates.

1. As mentioned paying points to buy-down the rate. However with rates slowly coming down, paying a significant amount of points might not be in your best interest long-term if you will just refinance to a lower rate in the coming year or so.

2. Increasing your downpayment/equity position and/or credit score. This might be the hardest route, but depending on your situation could provide the most benefit. There are huge price incentives at different Loan to Value ratios and with higher credit scores, so jumping to the next bucket might give you an edge.

3. Prepayment penalties can be a great way to get better terms on an investment loan. The key questions though are: how long? what is the pricing incentive? and what is the prepayment penalty? If you can get significantly better terms with a one year PPP, well that might be worth it. Or in the case of an investor we just helped he elected a 3 year prepayment penalty to improve his terms, but the PPP is only $750. You come across the same trade-off here as paying points, if you wish to refinance earlier to a lower rate then make sure that penalty is worth it.

How to get lower investor loan in this market ?

How to get lower investor loan in this market ?

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