7% Interest on a non-conforming ARM YIKES!

[Wendy Stclair]

Hi all

I'm a non-W2 employee and I've bought 6 houses the last 2 years with non-conforming loans at approx 4.25 - 6% interest, still making them cash flow without issue and putting 20% down with 30 year conventional loans. I've found several lenders doing these loans. 

I saw the hike coming but didn't anticipate this level so fast. I'm doing a 1031 exchange so I have both loan and equity (cash down) requirements ($378k in cash and $278k in debt if that helps) . I was really hoping this was my chance to level up into more Real estate and get closer to retirement! 

But today i was just quoted 7% for 20% down on a 7-year ARM (and yes prepay penalties if i opt out early). YUCK! I see my options as these and curious if anyone has other ideas or recommendations? I'm dealing with a few properties in this exchange so i can be flexible but man someone just moved my cheese... again!

1) put more down - i'm told that putting 50% downcan get me closer to 6% interest . 

2) opt for an interest only loan at about the same 7% rate (no prepay penalty) for 50% of the property or something and use the equity (cash) for the rest of it

3) quickly accept a high paying W2 job in the same industry i've been in and then maybe i can quality for 5 - 5% rates which is what i hear the fanny / freddie loans are creeeping up to now (I am actually interviewing for one but don't want to take it as i love my freedom!) 

is the grass any greener on any other sides of this yard? thanks! 

[Matthew Crivelli]

The rates at banks on investment properties will be 6%+ very soon. The Non-QM DSCR loans that are being quoted at 7% will soon be 8%+ as the 10 year treasury yield continues to spike and the feds continue to sell of there lot of mortgage backed securities.

Moral of the story - what ever you do, refi ASAP. We are now paying for our money printing sins of the last 20 years.