Mortgage Rates


#41

Is that investment property rate?


#42

I found this article written in June 2016 about cash out refi for rentals:

http://mymortgageinsider.com/cash-out-refinance-investment-property-12-4-2014/

The most relevant bits:

Here are some recent rules and guidelines for cash out refinances on rental properties as set by Fannie Mae:

* The maximum loan-to-value is 75% for 1-unit properties and 70% for 2- to 4-unit properties. These maximums are lowered by 10% for adjustable rate mortgages.
* If the property was listed for sale in the last six months, the maximum LTV is 70%.
* The property must not be listed for sale at the time of loan application.
* The property is not eligible for a cash out refinance if it was purchased within the last six months. There is an exception for properties that meet the Delayed Financing guidelines.


#43

Like Manch indicated, I am planning for cash out refinance for primary property (as I am not selling the home) to remove HELOC.

I am not using HELOC (zero balance), but every time loan application, they consider 1% of HELOC as my monthly payout. Planning to remove that issue as I can get 8% return on equity/rental investment.

Yes, many lender quote 3.65% (no cost) or 3.625% (with cost) at 75% LTV level. This is for 30 year fixed, I may consider doing refi even though it increases 0.125% or 0.15% rate (current 3.5%), but worth considering cash out. Helps me long term.

If you do not cash out, you can easily get 3.5% (with zero cost) or 3.375% (with cost). Check Bank of america or wells fargo or citi bank.

3.375% for 30 year from 3.875%. Whatever i am telling is super jumbo above 625k range, primary home


#44

Wow thanks .5% is a lot I’ll try those banks


#45

@Jil can you explain a bit about HELOC and this 1%? Do banks consider full amount of your HELOC is one of the mortgage? Even if it is interest only 10 yr draw period?


#46

Consider I have $500k first loan 4% for 30 year fixed and $200k HELOC at 4% 10 year draw period interest only payment.

We fully use 500k first loan, and the payment is $2387.08.

a) We do not use HELOC as it has zero balance. The actual monthly payment is zero as you have not used it.

b) Another case, we took 50k out of 200k, the actual monthly payment is $166.67/month at 4%.

The bank considers (for DTI purpose) $2000/month payment (i.e. 1% of 200k) instead of actual.

You total monthly payment is $2387.08+$2000 = $4387.08 !

I do not know how this logic is derived by bank of america, JP Morgan, Citi bank and wells fargo etc, many such banks consider this.

Whatever I heard, there are few bank or private portfolio lenders do not account like this useless logic.

If I refinance to $700k at 4% for 30 year, my payment is $3341.91.


#47

Thanks, Jil. I didn’t know how they calculate the HELOC, now I do. Wow, that actually change my thoughts about HELOC. I think I am in the similar boat with trying to increase my debt level to take advantage of low rates, so might be worth to actually do cash out refinance instead of HELOC.


#48

@myo, did you listen to a recent bigger pocket podcast about a guy in the DC market? He was saying how he intends to massively increase his debt level. He actually set a goal of some dollar amount of debt he wants to put on in 5 years or something. I was nodding my head throughout. His philosophy is virtually identical to mine.

But he plans to go into multi family. That I am having hesitation, due to the political climate here in California.


#49

Yea, I did. I like how he phrased that he wants to take advantage of market inefficiencies right now regarding low rates and looking to increase his debt by 1.5M or so more. I think that gels well with me and I am in the same boat about multi-family, but that might have to be outside of Bay area. Tahoe / Reno / Sacramento sounds appealing to me for multi-family.


#50

Of the three, which one is most preferred? You guys are so convincing :slight_smile: . Just for info, followed you into Falcon Pointe/ Black Hawks. Bought a SFH for about $300k, gross yield 8+%, cap rate should be at least 3%. Noted that the property tax there is 2.7% vs Rock Rock & Avery Ranch, only 2.3%.


#51

I still like Round Rock & Avery Ranch, but I went with Black Hawk coz I can get more for my dollar. What did you buy with 300K and rent? Mine is 225K (probably 250 now) 4/2.5 and renting for 1900.

Back to Multi-family, I don’t know much about Tahoe area yet, I think we can get input from @Elt1there. I like equally to Sac & Reno. Reno seems like a little bit more money for your dollars and still has potential. Good location in Sac seems like they are already high up already. I am only looking for B or B+ area, especially in California where rules are favored towards tenants.


#52

4/3.5 for $280k, rent $2100.


#53

http://www.cnbc.com/2017/05/17/mortgage-volume-drops-4-point-1-percent-in-latest-week-as-younger-buyers-bail-out.html


#54

young buyers spend too much.
I remember back then when housing price was high, we save, invest , save , save and wait for crash.
Now generations see high housing price -> gave up-> spend it all…


#55

If I recall correctly, is what Hong Kong ers did at one time. Any HK residents old enough to comment on this?


#56

Yup. Two types of commericals you see the most in HK
Travel Tour Commerical
Lender commercial

so borrow money -> travel

Oh one more , baby powder formula.

haha


#57

Add more fuel to the fire, Sir!!!

http://www.eastbaymodern.com/blog/


#58

Mortgage rate isn’t following fed interest rate increases.


#59

A week old, but according to this report mortgage rates head down in times of uncertainty…


#60

Yup, they follow bond yields. The 10-year treasury is usually the most similar in movement vs. mortgage rates. People buy bonds when they feel uncertain which drives rates lower.