Loan approval with high interest

1 Reply

When running the numbers on a an investment property the interest rate is obviously a factor as to how well the property will cash flow. If I house hack (which I have) I can qualify for a residential loan with a lower interest rate (say 2.8% today). However on a commercial loan the rates will be closer to 5%. Here’s my question;

If I make an offer contingent solely upon financing and the offer is accepted I am now liable to pay the earnest money deposit.  Say the offer gets accepting and the bank offers me financing at an unexpectedly high rate (say 6.5%). Now I am on the hook since the financing was approved, but given the high interest rate the cash flow may be far lower making the deal not worth doing. Is there any way to get exact figures on interest rates prior to approval? 

@Timothy Carey the answer here is yes!  This is exactly why we talk about being prequalified. Getting prequalified will tell you how much you can qualify for, what your payments will be, closing times, etc.  It will help if you can narrow down what you are trying to accomplish.  Buying a primary home is a lot different than buying an investment property.  Think of it like getting an UBER....they can't really take you anywhere without knowing your destination.  So if you can be clear on your purpose, then they can prequalify you properly so you know what to expect.  Hope all of this makes sense.  Thanks!