Do I take a 4.125% for $0 origination fee or 3.875% for $3800?!!

[Account Closed]

Hey folks, 

I'm borrowing $380,000 for a primary residence/investment property. It is technically considered a single family but there is  a 4 bed 2 bath house,  a 1 bed, 1 bath apartment AND a studio garage apartment.

Breakdown:

main house will be rented for $2250/mo which will cover the mortgage exactly. 

I will rent the 1 bedroom studio  for $500 and live in the 1 bed/1 bath apartment for free (will eventually rent for $900) 

Do I pay the extra $3800 up front for the lower 3.875 interest rate (mortgage payment will decrease by $54/month and it will take ~ 5 years to break even on the original investment of $3800 for the rate)? I'm inclined to do this knowing interest rates will likely rise soon and in general, this will be a nice interest rate on an investment property. I have the cash to do this. 

Or, do I take the 4.125 rate? Knowing that this is still a good rate and I don't have to bring the $3800 to do this deal?

I'll mention that this is something I plan to hold on to long term and that this is a turnkey property- no real opportunity to BRRRR

Hoping to lock in my rate today. Thanks everyone!!

[Chris Mason]

Originally posted by @Account Closed:

Hey folks, 

I'm borrowing $380,000 for a primary residence/investment property. It is technically considered a single family but there is  a 4 bed 2 bath house,  a 1 bed, 1 bath apartment AND a studio garage apartment.

 Have you told your lender that? Hate to be the wet blanket, but...

Might be worth giving your agent and lender a call. This isn't always a deal-breaker. You may want to explore "de-unit"ing the garage prior the appraisal.

To answer your original question, like Ryan pointed out the ROI on this rate buy-down isn't bad at all.