My offer has been accepted and signed. Now, I'm looking at financing options out there and Quicken Loan has been recommended. I am working with them to finalize rates and terms, etc. I am doing a 25% down since as they said it would help lower the rate. They have been fast in giving pre-approval and on top of it so far. I have never dealt with them and not so sure if I'm getting the best rates. I have asked other local lender with similar rates but they didn't dig deep into my info as QL did. As this is an investment property and not a primary, would anyone care to provide some advice on which loan option suites my need. I am not planning on holding on to the property long term, min 3yrs, max 6yrs.
a) 20yr fixed @ 4.50% total costs $3100
b) 20yr fixed @ 4.625% total costs $2700
c) 30yr fixed @ 4.875% total costs $2900
d) 30yr fixed @ 4.99% total costs $2600
I'd hold that loan from Quicken Loans in your back pocket and try to work with a local lender. You will never build a relationship with QL, where as a local lender will be able to guide you into the best loans for your needs and might be able to pull some strings or step on some necks to get things to happen for you.
As far as the rates, I don't think they are anything special. Is the "cost" an origination fee that you need to pay upfront? My lender waives that if the loan is not paid off in the first 3 years.
@Sada Rafi the rates look typical for the down payment you are looking at. Is there a reason why you are looking at a 20 year loan? Interest is important but since you are selling the home so quickly I might guess that you are banking on appreciation in value? If so, just go with the 20% down option. If appreciation is the strategy here then save your cash for other purposes (another home perhaps?). I'm giving these recommendations without knowing your full financial picture but if there is something else that is important here just let me know. Also, these loans don't have a prepayment penalty so if you wanted to pay off faster (for whatever reason) then you can stick with the 30 year loan and just make the 20 year payment. That way if things got crazy in the market you would have the flexibility to go back to the 30 year loan. In the 20 year, if the world got crazy, you would have no choices...you would always HAVE to make the higher payment. The "difference" of interest in 3 years would be negligible but having the flexibility might be important. I would recommend keeping your initial costs as low as possible since you will be selling the home so quickly. Let me know if you have any other questions. Thanks!
Thanks Matt and Andrew, for your input. My goal is to keep the upfront cost as low as possible and that's why I am more leaning towards the last option (d). The cost there is to be paid upfront. My total cost including tax and insurance and closing cost is little over 5K which I think is too high for the amount I am borrowing. To answer your question, I am purchasing the property due to its location (appreciation) and current rental market but only plan to keep for that duration. Is it really beneficial to borrow from a local lender/officer beside having a face to face experience which is not a "today" must have option anymore?
@Sada Rafi (feel free to tag people with the @ symbol, that will alert us to answer you) but even though I'm a lender I don't feel that the "face to face" thing is really that important. If you trust the person you are working with and feel comfortable using them then go for it. My wife drives across town for her hair appointment because the person listens to her. I'm sure there are plenty of hair people between here and there but she likes that person. Just go with who you like.
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