Are these loans fairly priced?

Question

Hello all

I am in the process of refinancing 6 rental properties in California. I'm being quoted 3.875% with APRs in the 3.96% to 3.97% range. The loans are 70% LTV with cash out. I have 7 loans in my name, good credit, and debt ratio isn't a problem yet (it will probably become one when I try to deploy the cash out. haha).

Anyway, do these seem like reasonable prices?  Historically, they seem UNBELIEVABLY low, but I keep seeing stuff in the 2's% on TV.  I'd love your opinions.  Thanks

Chris John · Answer

I'll definitely need to build that type of relationship moving forward as we're (my brother and I do this together but some are in his name and some in mine) looking to deploy the money we finance out.  We haven't decided on a market (we're in California but are super nervous about the new laws that don't seem concerned about landlords) yet or what we'll do when we get over 10 loans each (at least hopefully we'll get there...)

Kyle Altenau · Answer

Of course. I do recommend trying to work with a local mortgage broker in the future too. Specifically a commercial mortgage broker. They will have intimate knowledge of exactly what banks are lending in that area and of what terms. They also may have a dozen other clients they can dangle in front of a bank and leverage to get their clients even better rates. In theory, if you're working with a good broker, they may have been able to bring the exact same file to the same lender, but got you better terms in return.

Chris John · Answer

@Kyle Altenau

Thank you for the response.  My brother's lender said they could get 3.625% but then realized that she was dealing with more than four loans.  However, it made me realize that I don't really know what I should consider "good" and since I just discovered this awesome website...  haha

I hate turning in the documentation, explaining my situation, etc. so if nobody pops on saying "you're getting robbed" I'll just go ahead and progress with these loans.  The rates are allegedly locked, so hopefully they'll come to fruition.

Thank you again for the feedback as it gives me the confidence to proceed!

Kyle Altenau · Answer

The deals you've seen in the 2% range, may be well timed (or lucky) swap deals. There may also be some unfavorable sides of the terms they're not showing.

I know it's been difficult for a lot of borrowers to get cash out in some of their refinances and a lot only have the option of rate and term refinances. It's always worth looking into but if you have a term sheet or commitment that may be expiring, you may want to act before you lose what you have.