Rate quote today : 5.125% for 30 year

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Rate quote today : 5.125% for 30 year

Tandi H.
Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes

What do you think of this rate?  I'm wanted to jump on locking in a lender in case rates go up at the Fed meeting next week....

Property info:  Duplex, $155k, 25% down

Rate quote:  30 yr fixed, 5.125% (no points), $1339 lender fee

Anyone seeing anything better? 

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

@Tandi H. Mortgage rates dont nessecarily move in step with the federal funds rate. There is a long term correlation but not a short term. About half the time mortgages react in the same manner, and about half the time they move in the opposite direction. The supply and demand in the mortgage market is a much more powerful short term influence on rates than what the Fed does.

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  • Mark Bookhagen
    Buffalo, NY · Member since 2014 · 371 posts · 146 votes
    7y

    Seems good.

    0Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    Sounds reasonable 

    0Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y
    @Tandi H. Is that owner occupied or non?
    0Reply
  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    @Jason D. - This is for a non-owner occupied property...

    Thanks @Dennis M. and @Mark Bookhagen for your input.  

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    Thats about right. A few weeks ago youd be closer to 5.5%

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  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    Thanks @Russell Brazil.  I've had good luck with this lender so far.  Is there any news on the potential rate hike next week?

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    @Tandi H. Mortgage rates dont nessecarily move in step with the federal funds rate. There is a long term correlation but not a short term. About half the time mortgages react in the same manner, and about half the time they move in the opposite direction. The supply and demand in the mortgage market is a much more powerful short term influence on rates than what the Fed does.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
    WebsiteView Page
    8Reply
  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    @Russell Brazil  Interesting, I didn't realize that!  Thanks for sharing your knowledge.

    0Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y
    @Tandi H. That's a very good rate
    1Reply
  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    @Jason D.  OK good to hear!

    If anyone wants to comment on this property, I think it's a solid one.  B neighborhood, 2 bedroom/1 bath's, B condition building.  Here are the details:

    Duplex, $155k

    25% down, $38,570

    5.125% interest, 30 years

    P&I = $632.97

    Closing costs about $3000, not sure yet exactly

    Each side rents $750/mo

    Calculations:

    $18,000 Gross Income

    -$900 Vacancy 5%

    $17,100 GOI

    -$4,450 Operating Expenses

    • M&R 1000/year
    • Insurance $550/year
    • Taxes $2000/year
    • Water $900/year

    $12,650 NOI

    -$7,596 Debt Service

    $5,054 Annual Cash Flow

    $210/door/month

    8.16% Cap Rate

    12.11% COC

    1.67 Debt Coverage Ratio

    6Reply
  • Ronald Starusnak
    Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes
    7y

    That looks great man. 

    0Reply
  • Sam Shueh
    Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    7y

    Decent rates.

    0Reply
  • Ryan Woods
    Investor · Augusta, GA · Member since 2017 · 44 posts · 5 votes
    7y
    @Tandi H. Looks solid to me. Sounds like you’ve done your homework.
    0Reply
  • Kyle McCorkel
    Rental Property Investor · Hummelstown, PA · Member since 2015 · 638 posts · 653 votes
    7y
    @Tandi H. I think your maintenance should be at least 10% of rents, which would be 1800 I believe. I also don’t see an allowance for vacancy and management. Even if you are self managing you should factor in that number and not manage the property for free. That is your time and sanity and you should be compensated for it.
    1Reply
  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    @Kyle McCorkel Thanks, I understand that 10% maintenance might be common for some properties, however we've found that to be high in our situation - my husband is a licensed contractor so he can do all the work at very low cost, which helps a lot.   I did put in 5% for vacancy (-$900).  I've gone back and forth on property management - my job is managing our properties at this point, including our AirBnb.  Once we have built up our portfolio to a certain point, we would like to shift things over to a PM.  Probably 5-10 years down the road.  At that point the higher rents and values, improvements and possible refis will completely change the financials of each property.  That's why I don't have PM in our calculations now.  Just my own way of looking at things.

    @Ryan Woods @Sam Shueh @Ronald Starusnak  Thanks for the thumbs up!

    I locked in our rate this morning - 5%!  That is with an extra ~$500 in points to bring it down from 5.125%, with payback in 5 years.  Rates have really dropped from the 5.5% just weeks ago.

    1Reply
  • Jon A.
    Asheville, NC · Member since 2017 · 385 posts · 274 votes
    7y

    I am looking at the exact same rate of 5.125% refinancing a duplex and leaving 30% equity in the property

    0Reply
  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    @Jon A.  Great!  

    One question, why leave 30% in instead of 25% might I ask? 25% avoids MIP - and is enough to cushion minor property value fluctuations. We left 40% in our refi last refi because I was feeling cautious. Going forward I won't do that again. I'd rather have the cash to deploy.

    0Reply
  • Jon A.
    Asheville, NC · Member since 2017 · 385 posts · 274 votes
    7y

    @Tandi H. because it is a duplex and that is as far as they will let me go.

    0Reply
  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    @Jon A.  Oh I see.  My lender is allowing 25%. Do you use someone local or a national?  All my mortgages are with AimLoan.com.  

    0Reply
  • Jon A.
    Asheville, NC · Member since 2017 · 385 posts · 274 votes
    7y

    @Tandi H. I was told that I can only go 70% on a duplex and %75 on a SFH. I am finding it very hard to get it done as this is the second lender I have talked to. I find it impossible to actually shop a rate. The process is so overwhelming and takes so long I simply don't see how anyone has the time to shop rates. I will check with this guy today and should know more about it. I am actually using someone from Colorado who has ties to NC and is licensed here also.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Russell Brazil:

    Thats about right. A few weeks ago youd be closer to 5.5%

     yes everyone is saying rates are rising when in fact last few weeks as you noted they have fallen.

    I think it will be interesting to see how this plays out.. IE supply demand.. plenty of supply ( money) but demand goes down IE rates go up no one wants to refi.. and sales are slow this quarter.. mortgage rates come down to create a demand

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    1Reply
  • Jon A.
    Asheville, NC · Member since 2017 · 385 posts · 274 votes
    7y

    @Tandi H., I just sent my mortgage lender a text. You may be correct about the %75 on a duplex. I have had too many numbers rattling around in head the last 6 months or so and may just be recalling it all incorrectly.

    0Reply
  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    @Jay Hinrichs Yes, while I was on the phone with my lender to lock the rate this morning, the rates dropped.  Glad I didn't call 10 minutes earlier!  Though who knows, maybe I would have been even more happy if I'd waited till later today lol...

    0Reply
  • Tandi H.
    OP
    Investor · Albuquerque, NM · Member since 2017 · 133 posts · 83 votes
    7y

    @Jon A.  I would recommend you also check with Aimloan.com...they do a lot of volume with low overhead, and so far no one has ever beat their rates when I have been looking...

    By the way, how is the market in Asheville?  Is that where your duplex is?

    0Reply
  • Jon A.
    Asheville, NC · Member since 2017 · 385 posts · 274 votes
    7y

    @Tandi H., I will definitely keep Aimloan in mind. The duplex is in downtown Asheville and the market here is really high in my opinion but people just keep moving here. The downtown area is small and if you drive 20 min outside of Asheville in any direction you step back into 1965 in my opinion. Everyone visits downtown or west asheville and then decide to move here not keeping mind that the actual area that they appreciate the most is very small. I have been here just about 20 years. Traffic is becoming a real problem and rents are higher than most locals can afford. If I could turn the clock back 15 yrs I would, even though the growth behooves me as an investor. My lender says that 75% is doable my dti may be holding me back. So you are correct with the LTV.

    0Reply
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