Extra 5% down for .375% rate savings?
Buying a turnkey rental and the lender has proposed the two options below.
Part of me says the tenant is ultimately paying off the loan, so who cares? Take the extra 5% down and use that $4K or so as down payment on the next one.
The other part of me says, it's ONLY $4K and feels like a sucker locking in north of 5.00% interest in this environment. Take the extra $36/mo cash flow and essentially "break even" in about 9.5 years.
What do you guys think?
Rates for the 30 year fixed mortgage are as follows:
20% Down
Loan Amount $67,200.00
Rate: 5.125%
P&I $365.90
Insurance $45
Taxes $85
25% Down
Loan Amount $63,000.00
P&I $329
Rate: 4.75%
Insurance $45
Taxes $85
Most Popular Reply
I'd take the lower down and invest it into another property. I ALWAYS put the least amount down as long it the deal cash flows to my criteria. Putting more down earning 5% a year in savings does not make sense when it could earn 15-20% or more on another property plus then you have more tenants paying your mortgages and in turn your making much more money. Just my 2 cents.