How to Shop Interest Rates

Question

I’m looking to refinance my first investment property in Chicago, IL What is the best way to shop the interest rates to ensure I get the best rate?

Robin Simon · Answer

I would check out the Featured Lenders page here on BiggerPockets and contact a few of them directly for quotes

https://www.biggerpockets.com/...

Henry Clark · Answer

I wouldn’t shop for the best interest rate.  Look for the lender who will be your best teammate.

Looks like you’re doing out of state.  Look for a lender who can do multi state.

Recommend you stay with one lender.  Especially starting out. That way they know your story.   Less paperwork with multiple lenders.   Most important you can cross collateralize your equity between properties.  Can’t do that if at different lenders.

Doug Smith · Answer

I love Melbourne! My wife and I are heading over to a friend's beach house off of A1A on Melbourne Beach next week for a couple of days. Now to your question. This is totally going to go against the grain, but I've found that minor variations in interest rate are not as important as "closability". Over my 32 years of being a lender, I'vd learned that the lowest rate that is quoted is often the lender that struggles to close the loan. We have a lot of funds and lenders we can run deals through, but I often have to balance the experience the client will have with the rates and terms offered. For instance, I recently outlawed our loan officers from using our lowest priced lender because they struggle to close on deals and the experience for the customer is usually a bad one. With anti-steering laws, we make exactly the same amount with any lender we send a deal through. That keeps our loan officers from steering the customer to the lender that will make them the most money, but more important than rate, in my humble opinion, is the ability to actually close on the deal. You never want to see a customer waste appraisal money and 3 or 4 weeks of their time to struggle to close at the end. I would look just as much if not more at "closability" than rather than rate. Obviously a massive difference is something to look out for, but the ability to close smoothly is more important if the rates and terms are reasonably close. Good luck. Enjoy Melbourne...one of my favorite places in Florida.

Doug Smith · Answer

I just voted for you and pushed you over the top! lol

Andrew Postell · Answer

@Doug Smith how are you and I BOTH the #1 Creative Finance contributor?  I guess they give these rankings out like candy.

John Warren · Answer

@Henry Clark this is so true. I have no idea why everyone wants to shop rates on every deal and then try to go through the process with a new lender every time.

Carlos Ptriawan · Answer

For me I time everything when I lock the rate, it could go as wide as 1.0 bps within 2 weeks. During SVB collapse bond yield crashing for two days, that's when I lock 5% interest rate for 10YARM. It was just few months ago.

Leon DeSimone · Answer

Not sure I would try to time anything. Just because the MBS market shows an improvement doesn't mean the lender will follow suit. They could be slow to respond or try to cover lost margins from a prior rate sheet. Also, if looking at non-qm, they are less sensitive to the day-to-day fluctuations of the MBS market.

Carlos Ptriawan · Answer

The best way to get best interest rate is to timing the bond market, find time when the bond market falls and lock the rate at that particular date.The lender would just quote you the same range.

Andrew Postell · Answer

@Doug Smith right back at ya ;)

How to Shop Interest Rates

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