Cash-out Refi Interest Rates

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Cash-out Refi Interest Rates

Mel Hayes
Investor · Los Angeles, CA · Member since 2016 · 256 posts · 110 votes
Hello everyone, Like most investers right now I'm trying to do a Cashout Refi.  I've spoken to about 5 lenders and I've gotten a vast amount of responses to my attempt to Refi.  Some lenders have told me that they are staying far away from investment properties.  The other 3 lenders gave me different interest rates.  One lender quoted me 4.6%, one said they could do it at 3.1% (which sounds like bs) and another told me 3.8 that would cost me 1 point.  

My question is what is a good realistic rate on a cashout refi?  What is bad deal on a cash-out refi?  Has anyone (lender or borrower) done a cash-out recently?  What is the current market for cash-outs right now?

Thanks to all those who reply.
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Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
5y
Originally posted by @Vince Rodriguez:

I got 2 cash out refi done last month at 3.375% they were both investment and duplex and a triplex. In Bakersfield CA. If you are paying more than 3.875% you are pretty much getting scammed! :)

Not to be rude, but there are so many factors that come into play regarding lending like the borrower's qualifications, the property's qualifications, ltv and market conditions to just name a few, that saying someone is "getting scammed" when they're quoted a rate more than your perception of today's market is nonsense.

For example. This morning's rate range for a 3 unit in Summit County Colorado (Breckenridge, Dillon etc...) goes from 2 points at 4.125 to 3 points at 3.375. Both on a 30 year fixed. You can go down into the 2's if you pay a boatload of points. All of these are at 70% ltv because of Fannie's restriction on units. Not California, but similar MSA. If you wanted to go to 75% cash out on the same 3 unit, you could go use a DSCR loan an pay the broker 2 points at 4.5% and call it a day. You could even buy it down to 3.99 with 2 discount points if you want. Scam? No. Real time rates and real time offers. Again, all on 30 year fixed.

Everybody's situation is different and each loan is different.

One girl's opinion

Stephanie

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  • Abby Weinstock
    Lender · Baltimore, MD · Member since 2020 · 115 posts · 70 votes
    5y

    @Mel Hayes, the rate that you will get will likely be driven by a number of different factors; for example: (1) your credit score, (2) the type of property (SFH, duplex, etc.), (3) the size of the loan, and (4) the DSCR. It's hard to comment on a good/realistic rate in general terms because various factors will impact the rate.

    4Reply
  • Mel Hayes
    OP
    Investor · Los Angeles, CA · Member since 2016 · 256 posts · 110 votes
    5y

    @Abby Weinstock

    Thank you Abby,

    credit 700

    Single family Home.

    0Reply
  • Irina Belkofer
    Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    5y

    Just recently tried to get quotes for cash out for my rental SFR, MV=$130K, to get $100K.

    One lender said approximately 4.8% with 2 points, closing cost about $4700, another 5.7% with one point, haven’t asked about closing.

    MyFICO 800+, the house is in my LLC free&clear.
    id like to know if there are lenders on cash out for rentals at 3.5% especially no points. I was told that there is no such thing as no points investment loan

    0Reply
  • Gregory Emmer
    Licensed Mortgage Lender · Fort Lauderdale, FL · Member since 2014 · 98 posts · 13 votes
    5y

    Market rates for cash out refis my competitors and I are offering are typically within the 4% - 5.5% range with points for 65% - 75% LTVs. Rates are sensitive to credit and LTVS. 

    I do not think that the lender offering 3.1% is likely illegitimate (sounds too good to be true) and, if they are legitimate, they must be more akin to a traditional bank which takes 60+ days to close.

    0Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    5y

    @Mel Hayes

    I did my cash out refis about a year ago, so my numbers won't help you.  However, I will say that I bounced the idea of higher rates off of my lender (we're looking to do some purchases right now) and he said that it has a lot to do with the portfolio of loans that lenders are currently holding, so it may be possible to get better deals than you realize if that's true.  Having said that, I love my guy, but have no idea of the accuracy of his claims.  When we discussed this about a month ago, he said that his companies portfolio was in pretty good shape and was able to offer lower rates than some of their competition at that time.  Again, I have no idea of how accurate any of this is and I'm sure that people with a better idea can chime in. 

    I'd be happy to send you his number if you pm me though.  I've sent him several people and they've all been really impressed with him.

    Best wishes

    0Reply
  • Courtney Young
    Member since 2021 · 11 posts · 6 votes
    5y

    We just did one in Napa on an investment and got 3.25% with cash out. We paid for a point. 

    2Reply
  • Jeremy B.
    Rental Property Investor · Marion, OH · Member since 2015 · 13 posts · 14 votes
    5y

    @Mel Hayes, you'd be better off getting quotes from another 5 lenders rather than asking other members. Try Network Capital and Angel Oak Home Loans. I'm not sure if they operate in CA but I've gotten good deals on cash out refinances of investment properties with them before

    2Reply
  • Mel Hayes
    OP
    Investor · Los Angeles, CA · Member since 2016 · 256 posts · 110 votes
    5y

    Wow. such great responses. All very helpful.

    1Reply
  • Mike Bolen
    Investor · Napa, CA · Member since 2016 · 95 posts · 62 votes
    5y
    3.25% is a great rate but would not be available on a SFR held in a corporate name as she described. If you refi'd at 3.25% you're holding title in your personal name. We could do a whole thread on why that's not optimal but if you have an SFR in Napa as a rental there's a 100% chance you're violating the 1% rule too!

    Originally posted by @Courtney Young:

    We just did one in Napa on an investment and got 3.25% with cash out. We paid for a point. 

    0Reply
  • Vince RodriguezPro Member
    Rental Property Investor · Costa Mesa, CA · Member since 2018 · 84 posts · 52 votes
    5y

    I got 2 cash out refi done last month at 3.375% they were both investment and duplex and a triplex. In Bakersfield CA. If you are paying more than 3.875% you are pretty much getting scammed! :)

    2Reply
  • Roger Devore
    Investor · Kokomo, IN · Member since 2015 · 40 posts · 11 votes
    5y

    @Mel Hayes

    My search yielded low 5’s and only 20 year terms.

    0Reply
  • Irina Belkofer
    Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    5y
    Originally posted by @Vince Rodriguez:

    I got 2 cash out refi done last month at 3.375% they were both investment and duplex and a triplex. In Bakersfield CA. If you are paying more than 3.875% you are pretty much getting scammed! :)

    Not really……the rates are different for different states, different prices of houses, as well as they depend on personal credit, assets, DTI

    If your duplex market value is around $500K and my fourplex $200K - we will have different rates. California and Ohio never had the same APRs, never will.

    Location is very important- after all, we’re talking real estate…financing

    3Reply
  • Justin Manges
    Rental Property Investor · Owensville, IN · Member since 2021 · 33 posts · 14 votes
    5y

    @Abby Weinstock I’ve never done this before… what exactly is a point?

    1Reply
  • Abby Weinstock
    Lender · Baltimore, MD · Member since 2020 · 115 posts · 70 votes
    5y

    @Justin Manges, loan fees are discussed in point terms, and one point costs 1% of the loan amount.

    1Reply
  • Vince RodriguezPro Member
    Rental Property Investor · Costa Mesa, CA · Member since 2018 · 84 posts · 52 votes
    5y

    1 point is 1% of your loan amount , for a 100k loan 1k in points 

    1Reply
  • Mel Hayes
    OP
    Investor · Los Angeles, CA · Member since 2016 · 256 posts · 110 votes
    5y

    @Vince Rodriguez

    Congrats Vince on the two refi's. My properties are not located in California and I'm not sure what your credit score is but that is another factor to consider.

    I just got another quote for 3.875% with one point at 75% LTV. This actually the best rate so far in my opinion.

    How do you guys feel about paying points for lower rates?

    1Reply
  • Luke G.
    Rental Property Investor · Hammond, WI · Member since 2017 · 139 posts · 217 votes
    5y

    Paying points for a lower interest rate is more relevant to what your exit timeline is.  If you're going to be exiting out in a year or two it probably doesn't make much sense, if you anticipate holding for 5-6 years than it may make more sense to go that route.

    In WI right now quotes I've been seeing have been 75-80% LTV we're in the mid to high 3% range with no points on commercial loans with a 5,7, or 10 year balloon and 20-25 year amort.

    1Reply
  • Peter Morgan
    Rental Property Investor · West Des Moines, IA · Member since 2018 · 447 posts · 64 votes
    5y

    @Abby Weinstock

    Are interested rates tend to be more on duplex properties when compared to SFH?

    0Reply
  • Felix D Menendez Jr
    Investor · Lawrence, MA · Member since 2016 · 52 posts · 12 votes
    5y

    @Mel Hayes I'm in the process of my cash out refinance I close Friday @ 2.99%

    2Reply
  • Tiffany B.
    Investor · Atlanta, GA · Member since 2021 · 5 posts · 2 votes
    5y

    @Mel Hayes

    I’m finishing up a cash out refi on my primary residence so I would expect my rate for an investment property to be slightly higher. Traditional bank conventional rate of 3.10. I signed the loan app/disclosures Thursday night and had my appraisal on Monday. I was told it takes about 45 days but the loan officer thinks after they get the appraisal report they can close soon. I was expecting it to take weeks for my appraisal appointment.

    1Reply
  • David NutakorPro Member
    Rental Property Investor · Palmdale, CA · Member since 2016 · 122 posts · 88 votes
    5y

    @Mel Hayes, l have a lender who can do about 3.625% with 1 point. Feel free to get in touch with me for his contact details.

    0Reply
  • Jared RineBusiness Member
    Lender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes
    5y

    @Mel Hayes...too much to answer generally. Is this on your primary, or is it on investment property?  You have too many answers here in your thread that really don't pertain.  I'm a mortgage broker in CA, and on primary, you should be in the 2's.  If the property is an investment property, then more likely low 3's. Anything higher and you should shop around. As for broker comp, I'm not cheap, so I'm going to be more than 1 pt.  I don't even understand how you can go that low for comp unless it's a large loan amount.

    Jared Rine United Lending Partners53 Reviews
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    0Reply
  • Mel Hayes
    OP
    Investor · Los Angeles, CA · Member since 2016 · 256 posts · 110 votes
    5y

    @Felix Menendez This is on a investment property?

    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Vince Rodriguez:

    I got 2 cash out refi done last month at 3.375% they were both investment and duplex and a triplex. In Bakersfield CA. If you are paying more than 3.875% you are pretty much getting scammed! :)

    Not to be rude, but there are so many factors that come into play regarding lending like the borrower's qualifications, the property's qualifications, ltv and market conditions to just name a few, that saying someone is "getting scammed" when they're quoted a rate more than your perception of today's market is nonsense.

    For example. This morning's rate range for a 3 unit in Summit County Colorado (Breckenridge, Dillon etc...) goes from 2 points at 4.125 to 3 points at 3.375. Both on a 30 year fixed. You can go down into the 2's if you pay a boatload of points. All of these are at 70% ltv because of Fannie's restriction on units. Not California, but similar MSA. If you wanted to go to 75% cash out on the same 3 unit, you could go use a DSCR loan an pay the broker 2 points at 4.5% and call it a day. You could even buy it down to 3.99 with 2 discount points if you want. Scam? No. Real time rates and real time offers. Again, all on 30 year fixed.

    Everybody's situation is different and each loan is different.

    One girl's opinion

    Stephanie

    6Reply
  • Jonathan PavkovBusiness Member
    Columbus, OH · Member since 2021 · 201 posts · 166 votes
    5y
    Originally posted by @Mel Hayes:
    Hello everyone, Like most investers right now I'm trying to do a Cashout Refi.  I've spoken to about 5 lenders and I've gotten a vast amount of responses to my attempt to Refi.  Some lenders have told me that they are staying far away from investment properties.  The other 3 lenders gave me different interest rates.  One lender quoted me 4.6%, one said they could do it at 3.1% (which sounds like bs) and another told me 3.8 that would cost me 1 point.  

    My question is what is a good realistic rate on a cashout refi?  What is bad deal on a cash-out refi?  Has anyone (lender or borrower) done a cash-out recently?  What is the current market for cash-outs right now?

    Thanks to all those who reply.

     Go for lowest fixed rate, longest term to keep payments down if you plan on staying in RE for a while. Also - make sure it's not a commercial loan, as you'll pay more points, higher interest and probably have prepayment penalties.

    [email protected]614-802-5721
    0Reply
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