I am currently in contract with a investment property here in Florida. I am calling lenders in the area and this is their rate offers thus far.

Cornerstone: 4.75-5.245 30yr 20%down     Hancock: 5.125 25%down    and Quicken Loans: 3.6-5.125 15%down

My question is pertaining to points and if anyone recommends Quicken.  Quicken says that it will cost 3 points for the lowest rate and -3.25 points for the highest rate. My plan is to hold the property for long term rental, but plans could always change as I purchased with equity in the home. 

I am leaning towards Quicken with less money down and actually using the negative point and having a higher rate.

Would you recommend paying for a lower rate or even receiving money for the higher rate? Please explain as to why either way. 

Thank you in advanced!

Zach

Hey Zach , if you intentions are to buy for long term I would personally go with the lower rate however if you undecided maybe save the cash for now to possibly get into another deal and refi later if you decide you want to keep it for the long haul. 

@Zach Falbo If you plan to invest more, I would save your cash and not take the points. Have you ran a simple interest comparison with the different rates - points versus no points? How much does it save you compared to what you are spending. Also take time value of money into consideration. 

Secondly, I will straight up tell you I am a lender. Regardless, you can find much better than Quicken. Better on rate by a good amount. Better on service and consultation as well. A good LO should be able to troubleshoot this question for you.

Feel free to PM me if you would like but no worries either way. 

@Zach Falbo

It's really a math question; should I pay up front and get long term gain or get everything covered and over the long run, pay more.  Do the math and see which one works for you and your financing goals.  If you can afford it, pay some points and get a low rate if you're going to hold the property for a while.  If you can use the cash in other places and don't want it tied up (maybe you want to acquire additional properties and that cash could make you money other than savings on an interest rate) then keep your cash, take a par rate and close.

Either way, you're in a good position.  Lots of concerns about "online lenders" although last time I checked, Quicken is the #1 non-bank lender in the nation.  Must be there for a reason, but I don't think it's because of their investor presence.

Stephanie

@Zach Falbo , I'm wondering how you got them to do the deal with 15% down?  I'm under contract and everybody is sticking with the 25%.

FWIW, I've got good credit (720-760), low DTI (25%).

How'd you do it?  Maybe i'll call quicken back!

@Zach Falbo I would need more information on your current scenario but I would check with a broker before you go with a big box online lender.  I use Quicken on the wholesale side where the pricing is better but rarely send them by business based on price.

There's another way to look at this @Zach Falbo

Someday the lowest possible interest rate on the house might be very valuable.  Meaning, if rates hover around 10% fifteen years from now and you want to sell, you could become the bank yourself, carrying back the paper, or even wrapping the mortgage and living nicely off the spread.  As others pointed out, yes the simple math is clear in terms of amortizing the points over how long you will own compared to monthly payment and yadda yadda...but you are a real estate investor.  And if you intend to remain a real estate investor for decades and want the answer that gives you the most powerful options, take the lowest interest rate today.