interest rates for conventional loan

[Kenton C.]

I just got prequalified today for a 100 k loan for my first investment property which will be a buy and hold single family home. This was through security national mortgage company, and not a typical bank. I have a credit score of 780

The lender didn't give me an exact rate quote but said that they were closing stuff around 5 1/8% and 5 3/4%. I see ads from banks quoting rates around 3.75-4%. Am I missing something? Why is there such a lare difference in the rates?

[Hattie Dizmond]

Not knowing what you're putting down or what the terms are, it's a little difficult to speak specifically to the rates you've quoted.

However, the lowest rates are generally reserved for owner occupied properties with insured mortgages.  You're getting a mortgage on an investment property.  That's probably an uninsured, conventional loan.

The rates you've been quoted are not bad rates at all for a non-owner occupied mortgage. It's a heck of a lot cheaper than HML money, but I would still encourage you to shop around, particularly with credit unions and smaller, local lenders.