Interest rate comparisons, which is best way to go?

5 Replies

If I were purchasing a SFH as my first investment property outside of my primary mortgage, Is one of these options clearly a better way to go? Assume if I only put down 20%, i'd use the remaining cash to save towards my next investment home.

Sale Price: $120,000

30 yr fixed

Option A

Interest rate: 4.5%

Down Payment: $30,000 or 25%

Total Cash Required: $34,967

Option B

Interest rate: 4.625%

Down Payment: $30,000

Total Cash Required: $34,517

Option C

Interest rate: 4.875%

Down Payment $24,000 or 20%

Total Cash Required: $28,751

Also, is shopping around the only way to determine if your getting a fair deal?  Thanks!

This is the perennial question of leverage. Would you prefer safety? Put the bigger down payment and get the lower APR with option A. Would you prefer to save the cash and put it towards getting a third property? Pick option C.

It all depends  on who you ask and if they have a conservative or risky strategy.

@Jeremiah Lee

Go for units for your first investor property.  If you have enough cash to put down, units makes more sense.

Other than that, it's just a math problem coupled with what you feel comfortable with and qualify for.


Originally posted by @Melvin List :

@Jeremiah Lee any upfront fees on these options?

Thanks Melvin,  what's your definition of upfront fees? There is $1,834.00 for items payable in connection with loan for option C and $2,036.50 for option A.  Sorry, newbie here.