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Where can I get a good rate on a cash out, non-owner, fully occupied, investment 2-fam?

Where can I get a better rate on a 85K, cash out, non-owner, fully occupied, investment 2-fam? 65% LTV. Good rents, cash-flow positive, good condition, good neighborhood. 
  • December 13 2011 - Shaw
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Answers (5)

Gregorio Denny "AKA Chuck,"

The maximum cash out on a 2-unit investment property is 70%. With the minimum cash out fee of .25% with a 740+ FICO score which could go up to .75% with the minimum required 680 FICO score. There is also a 1% fee for a 2-unit property and a 1.75% fee for an investment property.

Then the borrower still has an origination fee, a lender fee, escrow or attorney fee and a title fee. The new loan will also create a new amortization table that will not be at the current percentage of the borrower's monthly payment going toward his principal reduction.

It is not the extra fee for cash out, it is the combined total of the above that prompted me to say it is "probably" not worth a cash out refinance. I would assume that the borrower may be able to find it cheaper to receive a loan for the amount he needs elsewhere, even at a higher interest rate, without taking equity from his property. The borrower has to do the math to see if this is worthwhile. 

Happy Holidays, Rudi
  • December 14 2011
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There are the usual adjustments for your property being a 2 unit investment property and then there is an additional .25% adjustment for taking cash out. My comments were to clarify that the "fees for taking cash out" are not substantial and have little bearing on the overall cost of your refinance. Not being familiar with your specific qualifications and the actual terms you have been offered, I cannot say if 5.25% is good or not, only that whether you decided to take cash out or not would only affect the fees by $212.50.
  • December 14 2011
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Professor - where would I find the terms you're noting? My usual broker is telling me 3/4 point at 5.25%, which seems high to me.
  • December 14 2011
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"For the amount you would receive, it probably is not worth the fees for a cash out refinance."

Assuming the OP has a 740 credit score or above, the additional LLPA for a cash out refi at that LTV is .25% or $212.50.

How is $212.50 prohibitive?
  • December 13 2011
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For the amount you would receive, it probably is not worth the fees for a cash out refinance. If you wish to continue with your search, I suggest speaking with local banks and credit unions. Good luck.

Happy funding, Rudi
  • December 13 2011
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