Cash-out Refi Interest Rates

40 Replies

@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.

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

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.

Originally posted by @Jonathan Pavkov :
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.

Couple of things.

Sometimes the lowest rate is commercial in today's market.

Your statement about prepayment penalties is contradictory.  Why care about a prepayment penalty if the goal is to keep the property long term?  A prepayment penalty is only triggered when the loan is prepaid and if they're keeping the property in this historically low interest rate environment, the prepay only ensures the lender they're going to get a decent return on their investment in the event of refinance or sale.

Some folks don't qualify to get a loan backed by Fannie/Freddie. Commercial or DSCR is a very viable, and I will add affordable, cash flowing option.

Stephanie

@Stephanie P. yes rates fluctuate a lot, you are right. But thats my point, so use the lenders who offer lower rates. we are talking about agency debt, fannie freddie not portfolio loans like DSCR loans they are always more expensive, you only need those once your DTI is shot like mine is. I have 5 mortgages and my DTI is getting close to 50% there is absolutely no way I can keep doing these loans.

For this thread I don't believe any of the other loans are relevant, he should try to get the cheapest loan possible using agency debt. and at this point in time July/ Aug 2021 when interest rates are so cheap, why would you not try to get low 3s or mid 3s. I have one in GA as well. I have 11 mortgages in 3 cities and my highest rate is 3.875% and none of them are SFR , they are all investments.

@Vince Rodriguez

Agreed, the OP should try to get the lowest rate possible, but that's not always Fannie/Freddie right now and it depends on their situation.

I am always on the side of exhausting conventional loans first, but to say whatever is over 3.875% is a scam is not accurate.

@Mel Hayes lots of responses here. There are a few things to keep in mind.

1.) Agency loans and more conventional banks should always be cheaper than private loans. However there is more red tape and timing is difficult.

2.) Private DSCR loans across the nation are starting at around 3.75%. I've only heard of one company offering less, somewhere around 3.2%. There are endless companies that can get you 3.75% on a rental loan.

3.) All of the above are referring to 30 year fixed rates , most private lenders also offer ARMs.

4.) Every loan I’ve seen has at least a 3 year prepay and require 6 months of reserves

5.) Points and Discount fees depend on the deal and borrower. As mentioned, asset type/credit/LTV/cash out all incur pricing adjustments. Therefore your starting rate maybe in the mid 4's but then you can buy down your rate to the floor rate of 3.75% , and / or, lower your LTV for a lower starting rate.

Good news is that you have a lot of options! Just find credibility and reputation. Most any lender can match rates for the right deal. Good luck!

@Mel Hayes

I just did one 10 days ago and got a 3.49% cash out on my investment property with 1.92 points. That seems to be about the average rate. But good enough for me.

@Irina Belkofer I had the same response. Credit score over 800+, property value $216k, trying to cash out $130k. One lender quoted 5% with half a point for 30 yrs. Another quoted 4.6% with 2.5 point and no income proof, taxes etc other than copy of the leases, proof of rents and appraisal. Close in 30 days at a choice of my attorney, so I can shop around for closing cost. The same person also said most lenders are not doing investor loans due to Fannie and Fredi lowering it to only 7% backing of all their loans.

@Al Pat

I was also told that lenders are steering clear of investment properties.

Your rates seemed a little to include points. What banks/lenders are you speaking with. I do not have a 800 credit score and my first quote was 4.6 with no points.

You should def shop around.

@Jonathan Pavkov

My commercial rates are only an 1/8th higher than my best residential lender... at par with no points.  Pre-payments are non-issue as most don't refinance again within 3 years.  The 5 or 7 year PPP may be an issue, but not the standard 3.  

@Mel Hayes

Sounds to me like you need a mortgage broker!  Many lenders are shying away from investments, but the Non-QM and Commercial Lenders are most certainly not backing away at all!  I have lenders who are offering 2:1 buydowns as well as competing very well with investment cash out refis in residential.  

I work with more than 40 lenders... I do all the shopping for you.

Just give me the details... lol.

Cheers!

Nick Belsky