Ken writes: I’ve bought 3 homes over the last 5 years and refinanced one. Every time, I get surprised by a higher interest rate than what I expect, when it’s time to lock the rate. Can you share any thoughts about how to ensure you get the best interest rate or how to better understand what interest rate to expect?
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Welcome back to real investing. This is Tim Herriage. I am glad you stopped back by today. Ken writes, I’ve bought three homes over the last five years and refinanced one of them. Every time I get surprised by a higher interest rate than what I expected when it’s time to lock the rate. Can you share any thoughts about how to ensure you get the best interest rate or how to better understand what interest rate to expect? Well, Ken, thank you for writing in. I would imagine one of the reasons you’re getting a little surprised is you now have multiple homes, right? So many times when you have multiple mortgages and mind you, I don’t know the loan officer you were working with many times, they’ll ride it as a second home specifically, if the home that you’re living in is your primary residence and you are buying the new one while you still own the other one.
So often different mortgage companies and different mortgage guidelines will make it where that existing home, that existing mortgage, where you live at the moment is underwritten as your primary. And so the new one is a second home and the second home, right, is going to have a higher rate. It’s gonna have different down payment requirements. It’s gonna have different, um, debt, income requirements. It’s gonna have different LTV requirements. Um, and then, you know, I look rates are fluid. Uh, I tell everyone it’s, it’s, um, you really gotta watch the 10 year treasury and understand that, you know, rates move with that. And often there’s different rates for second homes. There’s different rates for investment property. There’s different rates for primary residences. There’s different rates for, uh, 15 year versus 20 year versus 30 year. I think since you’re someone that has a bit of a more complicated, uh, setup now that you own multiple houses, right?
That you bulk of the mortgage market is designed for people that only own one house. Um, so I’d tell you that you should be working with, um, probably, uh, maybe a banker, um, someone at, um, like truest, which used to be BB and T someone at one of the rate table lenders. Uh, that’s like the like bank rate or, uh, oh my gosh. Uh, I’ve got buddies that used to work for me, uh, at B two R that do that. You know, you’re basically looking for people that can go out and bid. I, I, I think you work with a broker, honestly. I mean, you, I think you, you need to work with a good loan broker here in Dallas. You’ve got Supreme lending. Um, you’ve got, uh, places like lending tree that can, you know, get multiple people bidding off of you. Um, you know, if you’re in the military, some of the credit unions, uh, or if you’re access have access to a credit union, uh, not, not just military to teachers, that kind of thing.
But for me, I think you have to understand that, you know, your FCO is going to be very important. I think you have to understand that your debt to income ratio is gonna be very important and you’ve gotta learn how to ask the right questions. I mean, you may wanna talk to your lender and, and ask, Hey, if I move out of this house and rent it out for the time being, and then apply for the mortgage, then can, you know, can I call this other one, a rental and the other one and, and then get the homeowner, the owner occupied rate, and, you know, some will say yes and some will say, no. Um, it’s always funny because often when they say yes, they are saying yes, but they don’t tell you that you need to have six months worth of rental income. So I, I feel like, I feel like, you know, you need to work with a good mortgage advisor.
Um, you may want to get some of these houses outta your personal name. Um, and, and, and not just outta your personal name, but off your personal credit report. You know, clearly we at RCN can help with that. Um, but, uh, our rates are a little higher, but they’re a little higher and it’s not on your personal credit report and you can put it in an entity, uh, and really avoid, uh, some of the liability issues. So I think there’s, there’s pluses and minus. Um, when I look at it though, my short advice would be get with a broker or someone at a bank or a credit union, not like a Wells or a city or a B of a, because they like to originate their portfolio loans. And I’m talking about, uh, one of these lenders that, that you haven’t established relationship with, where you can go sit down with someone and they can sell multiple products.
I like poking around bank rate.com, uh, and looking at the different arms and, uh, interest only options and the differences in the jumbos and the fixed, because all of that, uh, I think Ken, that’s what I would tell you to do hop over to bank rate.com and play with some of the calculators, because those calculators will, because if you’re looking at a jumbo, the rates are different. If you’re looking at a owner rock, the rates are different. If you want an arm, the rates are different. So everything’s diff everything is different by scenario. So I can tell you that since you own three homes, and it seems like you move a lot, um, I would imagine you are dealing with some of that. You’ve got three mortgages. They’re in your they’re reporting on your credit report. You’re not buying a second home anymore. Now it’s an investment, a first home primary residence anymore. Now it’s a investment property or a second home or a vacation home. And those are all treated differently. So hope that helps Ken, thank you for taking the time to ride in. I know how much your time is worth. Um, if you’re out there listening and you need any help in real estate or real estate investing hop over to, Ihavelunchmoney.com, submit your questions, and I will do my best to get to ’em. Thank you so much for spending time with me today. I’ll see you tomorrow.
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