15% down portfolio program? 6.75% interest
45 Replies
Roger Evans
Rental Property Investor from Boston, MA
posted about 1 year ago
I found a 3 unit multi family today. I have pre-approval for 15% down on a portfolio program non owner occupied. Interest rate is 6.75% how insane is that? My FICO score is 799 am I getting boned? I’ve never heard of 15% down usually 20-25 minimum.
Simcha Davidman
Rental Property Investor from Baltimore, MD
replied about 1 year ago
@Roger Evans Welcome to BP and congrats on finding the deal!
15% down is a real thing, and yes, you often pay a higher interest rate for it. You can ask them what rate they'd charge if you put down 20-25%.
But first, are you dealing with a legit lender? You could be getting scammed, but neither the 15% nor the 6.75% rate are inherently red-flaggy.
Doran Summers
Lender from Chicago, Il
replied about 1 year ago
@Roger Evans what’s the terms? Is it long term 30 yr mortgage? Or just a 2 to 5 yr terms?
Melvin List
Lender from Tampa, Florida
replied about 1 year ago
@Roger Evans investment loans will always be a little higher especially a investment portfolio loan.
Russell Brazil
(Moderator) -
Real Estate Agent from Washington, D.C.
replied about 1 year ago
First, on a multi, you are lucky to have even found someone that will loan at 85% ltv. With the rarity of that, yes Id expect to pay a very high interest rate. At 25% down conventional youd probably be at 5%.
Dylan M.
Rental Property Investor from Glens Falls, NY
replied about 1 year ago
I'm paying 6% on 75% LTV multifamilies. For 15% down consider yourself lucky.. Who is the lender?
Roger Evans
Rental Property Investor from Boston, MA
replied about 1 year ago
@Doran Summers 30 years
Roger Evans
Rental Property Investor from Boston, MA
replied about 1 year ago
@Simcha Davidman it’s terms I’ve received with a local reputable mortgage broker
Roger Evans
Rental Property Investor from Boston, MA
replied about 1 year ago
@Dylan M. local mortgage broker once I get the bank info I can send it over
Doran Summers
Lender from Chicago, Il
replied about 1 year ago
@Roger Evans I think the best I’ve seen for a 30 yr fixed is 6.25% at 80% ltv.
Doran Summers
Lender from Chicago, Il
replied about 1 year ago
@Dylan M. how many units are your properties?
Roger Evans
Rental Property Investor from Boston, MA
replied about 1 year ago
@Doran Summers it’s a 3 unit. Cash flow should be around $600-750 monthly. I plan to resell it in 3-5 and I should be able to profit $50k
Dylan M.
Rental Property Investor from Glens Falls, NY
replied about 1 year ago
Originally posted by @Doran Summers :@Dylan Mejo how many units are your properties?
all residential. 2-4 units
Doran Summers
Lender from Chicago, Il
replied about 1 year ago
@Roger Evans Nice. Keep us posted on who lender is and your experience. Thanks.
Doran Summers
Lender from Chicago, Il
replied about 1 year ago
@Dylan M. depends on credit score over 640 and value is over $100,000 you should be getting 80% ltv.
Dylan M.
Rental Property Investor from Glens Falls, NY
replied about 1 year ago
Originally posted by @Doran Summers :@Dylan Mejo depends on credit score over 640 and value is over $100,000 you should be getting 80% ltv.
Never been able to get 20% down as per Fannie/Freddie guidelines. Nor any local portfolio lender in my area. Owner occupied buildings...sure
Doran Summers
Lender from Chicago, Il
replied about 1 year ago
@Dylan M. you may have to look outside your area for lenders. Just a thought. Less guidelines and easier to close. I think rates for QM lenders are a little higher. These are programs which is t hard money but softer guidelines that banks.
Roger Evans
Rental Property Investor from Boston, MA
replied about 1 year ago
@Doran Summers think I could refinance to get a lower rate on this? I do have to go in and update the kitchen 5-10k upon purchase and fill the house with tenants
Doran Summers
Lender from Chicago, Il
replied about 1 year ago
@Roger Evans I think you have great terms at 15% down. You mentioned about wanting to sell in 3 to 5 years. So I would go with the lender you have unless you think it’s better terms for 15% down. Then refinance would still come with fees so keep that in mind. Plus you might not have enough equity in the property to refi after a year or two. Then you have prepayment penalties which is probably 3 to 5 years.
check to make sure you get term sheets first and review. Does the home need to be already rented for the bank?
Timothy Doenges
Real Estate Agent from Mount Nebo, WV
replied about 1 year ago
@Roger Evans everything I’ve bought so far has been a commercial real estate note, 6%-7% on a 20 year note, at 85% loan/15% down. I’ve been lucky enough for lenders to pay part of the 85% toward acquisition, and I pay closing costs. Repairs are my responsibility up to that 15%, then the loan kicks in for the remainder. I’ve done this 3 times now, and it’s let me do almost 0% down since I can do repairs at my own pace and use OPM for repairs, as long as I provide receipts.
In my market, change in rate between, say, 5-8% are so negligible in mortgage payment that I gladly concede that to get the 0% down terms that I like.
It’s a give and take game. Find a bank that lets you play to win.
Tim
Daniel Porter
from Florida
replied about 1 year ago
I just closed Tuesday on a SFH. 15% down, 5% interest rate. The numbers worked so I went for it!
Good luck on your deal.
Noah Swank
Investor from Wichita, KS
replied about 1 year ago
3 units, 20% of cost down we get low 5% right now, fixed for 5-7 years only. Sometimes that is less than 20% of ARV if we put together a value add deal.
Roger Evans
Rental Property Investor from Boston, MA
replied about 1 year ago
@Daniel Porter Congrats! Investment?
Rob Singh
Financial Advisor from Lake Zurich, IL
replied about 1 year ago
@Daniel Porter what’s the name of the bank?
Angelo Mart
Professional from Parsippany, NJ
replied about 1 year ago
Who is the lender?? I want to work with them