Are Mortgage Rates Higher in Different States? Like Ohio?

Question

I own property in Ohio and California and have been refinancing several of them. I have been surprised that the rates I am getting quoted in Ohio are significantly higher than those I have been getting in CA. The Ohio Lenders say that the rates they offer should be the same as in other places in the country, but they don't seem that way. For example, I just funded a refi of a non-owner occupied Singe Family for a non-cash out in CA at 2.99%. ( I bought it down for a little less than a point but the base was 3.15%). This was not a jumbo, the debt was 356k. I admit I did lock this before the pandemic. The lenders in Ohio have been saying that for a cash out non-owner occupied duplex I would be looking at something in the high 4 percents.

I was hoping you savvy lenders and investors could shed some light on this for me. Why would interest rates be higher in some states over others? Or do I just need to shop around more? Any recommendations would be appreciated.

Chris Mason · Answer

Please post the full "Closing Disclosure" and "Uniform Residential Loan Application" from that 3.XX% "non owner occupied" refinance, the docs you signed at the closing table. Redact the SSN and employment and stuff like that. No point in continuing without that, for reasons that will shortly (if you post that) become evident. I already know exactly what it is going to say, but it will take you less time to post that 10 pages of docs than it will take for me to describe it.

Zack Karp · Answer

@Alma Mills no rates do not vary from state to state. But they do vary based on the credit score, loan type, term, loan amount, loan-to-value, property type, etc. And you are comparing a rate/term SFD to a cash out 2-unit, which are most definitely not the same rate, there is a pricing adjustment for cash out and for 2-4 units. And of course anything you are comparing pre-pandemic to now is like comparing apples to oranges.

Best of luck!

Chris Mason · Answer

Cash outs have higher rates.

2-4 unit properties have higher rates.

Among other things, those are two that you mentioned.

Those stack cumulatively.

FNMA LLPA matrix here, showing all the "hits" --> https://singlefamily.fanniemae.com/media/9391/displayNormally, 1% of "hits" there translates into ballpark 0.25% to rate. Right now, depending on the lender, it can be more like 0.5%. This is how you wind up with vanilla owner occ rates being lower than normal while concurrently investor type scenarios end up the same, if not higher, even though it's the exact same rate sheet.

Robert Ellis · Answer

Try Matthew Casey with Fairway. He's a columbus and ohio broker.

Alma Mills · Answer

@Chris Mason and @Zack Karp

I am aware of the hit I get for a cash out and a 2 unit vs a single family but these hits should not come out to 1.75% (175 basis points). It should be maybe 50 basis points don't you think?  At the same time I was quoted the 3.15% on the non owner occupied single family I was quoted a 3.65% on a Jumbo cash out duplex here in Los Angeles.  Due to the penalty for Jumbo I would have guessed that I could at least get the same on smaller cash out non-owner occupied duplex in Ohio.  I have contacted several lenders in Ohio and they have quoted me rates that seemed about 100 basis points (1%) too high compared to what I was offered in CA.

I do understand that right now the rates are bouncing all around but I am just wondering who can help me get competitive rates in Ohio?   Maybe lenders in Cincinnati, Columbus or Cleaveland might know.  My mortgage broker here is not licensed in Ohio so they can not help me.

Alma Mills · Answer

I am sorry I have not been clear.  I have been looking into rates for a refinance on my Ohio Duplex for about 6 months (pre-pandemic) and I have been consistently finding rates that are over 1% higher on the exact same product (2 unit, cash out) as my CA mortgage broker.   Has anyone who invests in multiple states seen discrepancies like I am?

Casey Rolland · Answer

@Chris Mason

Thank you Chris, I knew there was the hit list but it seems there is a pretty big hit for investment properties. It's nice to see the table finally.

Remington Lyman · Answer

I have a list of people I can send you

Zack Karp · Answer

@Alma Mills again the rates you were quoted pre-pandemic don't apply anymore.  A lot has changed in terms of the secondary market and loan pricing in the past few weeks.  Loans with high LLPA's (Loan Level Price Adjustment) are a lot higher now because investors aren't paying what they were for the higher coupon rates like they were a month ago.  This is due to added risk of both prepayment and non-payment.  If you called that same lender who did your 3.15% rate on your CA property today, I can GUARANTEE you that that same rate/cost is not the same today as when you locked in before.  And once you add in the LLPA's for 2-unit and cash out, that's the disconnect you are seeing.  I wish that I could tell you what you want to hear, but no one in OH or any other state is going to magically give you the rate/cost that you think you can get.

Are Mortgage Rates Higher in Different States? Like Ohio?

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