Author Topic: Owner Occupied duplex - Any lenders offer rates similar to SFH?  (Read 1567 times)

J Boogie

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Owner Occupied duplex - Any lenders offer rates similar to SFH?
« on: November 02, 2020, 02:33:15 PM »
Hi everyone, I am looking to refinance. Currently with USbank. Seems like my property type bumps my rate up about .5-1% which I am fairly sure could be industry standard, but wanted to check here just in case.

Anyone know any lenders that don't increase the rate for an OO duplex vs a SFH?


Lucky Recardito

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #1 on: November 02, 2020, 02:36:36 PM »
We own a duplex (owner-occupied); purchased 2013 and refinanced earlier this year. In neither circumstance was I able to get the best market rates I was seeing otherwise.

I did better with a local broker than with a national bank -- this year's refi was thru a local credit union (but offered thru a local broker). We refi'ed at 3.125% in March/April, 30 yr fixed. That was slightly higher than the best rates I saw advertised at the time. Good luck!

J Boogie

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #2 on: November 02, 2020, 02:46:32 PM »
Not bad. Unless I hear otherwise, I'll probably save myself the trouble of turning over every last stone looking for that one lender that doesn't differentiate. Thank you Lucky!

Papa bear

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #3 on: November 02, 2020, 04:55:18 PM »
Iím getting some paperwork together for some 2 unit investment properties.  Iíve been quoted 3% fixed rate for 30 years. BUT itís heavy in points on the front end, like 4.5 points. 

In the grand scheme of things, I really donít care about adding points, theyíll just roll into the loan. These are buy and hold properties, so if I can pull out a bunch of cash for minimal in payment increases at a super low rate locked in, Iím on board. 

Iíll let you know what weíre at when we get closer to actual numbers. 


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Archipelago

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #4 on: November 03, 2020, 05:04:30 AM »
Just chiming in with some more figures. Northeast U.S.

Citizens Bank.
3.375% 30 year fixed on an owner occupied 4-family. 0.5 point
3.5% 30 year fixed on a non-owner occupied 4 family. 1.5 points

Shop your lender and don't be afraid to negotiate.

Check out SoFi for duplexes. Last time I checked they only gave out mortgages for 2 or fewer units. They're worth adding to your shopping list.

Fuzz

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #5 on: November 05, 2020, 10:13:57 PM »
Anyway care to share if these are for jumbo loans on multifamily properties?

Lucky Recardito

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #6 on: November 06, 2020, 12:17:09 PM »
Our original purchase loan (2016, not 2013 as I mistakenly typed above) was Jumbo. We were unable to get a 30-year fixed on a jumbo multifamily at that time, period end of story. Instead, we got a 7/1 ARM at 3.25%. No points.

2020 refi was no longer Jumbo -- combination of some principle paydown + the conventional limit increasing. That's when we were able to move to 30-year fixed (our primary reason for refinancing) at 3.125%. No points, no closing costs (repeat business with our previous lender).

J Boogie

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #7 on: November 12, 2020, 11:21:14 AM »
Thanks everyone for chiming in.

Right now I'm on the doorstep of refinancing with SoFi at 3.625 but got cold called by Amerisave who dangled a 30 year 2.875 in front of my face - even after learning the property is a duplex and I'm rolling a HELOC into it.

I'll move forward with Amerisave cautiously as this sounds a little too good to be true, but given how much daylight there is between the two I'm optimistic they can beat SoFi.

I'll post more as I learn. Hoping this could be of value to other duplex dwellers out there.

Archipelago

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #8 on: November 14, 2020, 08:31:22 AM »
Thanks everyone for chiming in.

Right now I'm on the doorstep of refinancing with SoFi at 3.625 but got cold called by Amerisave who dangled a 30 year 2.875 in front of my face - even after learning the property is a duplex and I'm rolling a HELOC into it.

I'll move forward with Amerisave cautiously as this sounds a little too good to be true, but given how much daylight there is between the two I'm optimistic they can beat SoFi.

I'll post more as I learn. Hoping this could be of value to other duplex dwellers out there.

Interest rate is not the only factor. You need to look at the points, fees and costs of the loan when making a comparison. Asking for an initial disclosure from the lender will help you evaluate loans as an apples to apples comparison.

J Boogie

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #9 on: November 15, 2020, 02:31:25 PM »
Thanks everyone for chiming in.

Right now I'm on the doorstep of refinancing with SoFi at 3.625 but got cold called by Amerisave who dangled a 30 year 2.875 in front of my face - even after learning the property is a duplex and I'm rolling a HELOC into it.

I'll move forward with Amerisave cautiously as this sounds a little too good to be true, but given how much daylight there is between the two I'm optimistic they can beat SoFi.

I'll post more as I learn. Hoping this could be of value to other duplex dwellers out there.

Interest rate is not the only factor. You need to look at the points, fees and costs of the loan when making a comparison. Asking for an initial disclosure from the lender will help you evaluate loans as an apples to apples comparison.

Somehow Amerisave offered a deal for about 1k less all in - 6 or 7k on a 250k loan, treated as a cash out since I need to roll the HELOC into it.. I think perhaps their deal is that they require a $500 payment pretty early on in the process whereas you can flirt with the other companies for a while, wasting their time and cutting into their margins.

Guy confirmed I'm locked in, but I'm not 100% sure there won't be a little bit of rug pulling just yet. I'll let you all know if it goes through as promised. Seems pretty dang appealing given its almost an entire percent less than what I thought was a pretty attractive option.

Papa bear

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #10 on: November 23, 2020, 03:03:20 PM »
Ok, so for a 2 unit investment property, cash out refinance, Iím locked in at 3% for a 30 year fixed with 3.875 points. 

1 point for a double, 2 1/8 for a rental, and the rest because of a cash out. 

So Iíll roll those points into the loan and take out a bunch of cash. 


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ResolLaTot

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #11 on: December 01, 2020, 11:37:01 AM »
Hello, I've been following the forums from afar for a couple years.  Dipping my toe in here. I entered the pipeline for a refi with cash out on an owner occupied 3-Unit yesterday.  I fear I've made a mistake.  Would you pull the plug or the trigger? 
(pulling the plug now may result in $500 dollar loss in loan initiation fee)
Apologies to OP if this is considered thread hijacking. I do provide a data point for multi-unit, owner occupied refi costs. Will move to new thread upon request!


Current Loan Amount 131K remaining on 150K at 3.75%  (OPP 185K)
New Loan Amount 167K on likely appraisal of 250K at 2.875% (APR 3.13)


Origination Charges  $4,391
Points 1.875%    $3,141
Processing fee    $900
Underwriting fee $350

Sundry fees I don't feel like listing: $789
 (appraisal plus rinky dink items like flood det., certification, credit monitoring etc)

Title related fees: $1,734
Recording/Transfer Tax fees: $202

Total $7,116  (Ouch, when I see this writ large I fear I've messed up)

Outcome: payments stay roughly the same with 25K cash out.
Reasoning for Refi: Security of cash cushion in an uncertain world. Would like to add 2nd bathroom to owner's unit in preparation for move and hold in 1-2 years (Large 3br Unit will rent for substantially more with 2 bathrooms).

Thank you for weighing in with your experiences. I'm a fan of these forums and enjoy the insights handed out here like king-size candy bars on Halloween!


-RLT






« Last Edit: December 01, 2020, 11:47:31 AM by ResolLaTot »

Papa bear

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #12 on: December 01, 2020, 12:11:13 PM »
Hello, I've been following the forums from afar for a couple years.  Dipping my toe in here. I entered the pipeline for a refi with cash out on an owner occupied 3-Unit yesterday.  I fear I've made a mistake.  Would you pull the plug or the trigger? 
(pulling the plug now may result in $500 dollar loss in loan initiation fee)
Apologies to OP if this is considered thread hijacking. I do provide a data point for multi-unit, owner occupied refi costs. Will move to new thread upon request!


Current Loan Amount 131K remaining on 150K at 3.75%  (OPP 185K)
New Loan Amount 167K on likely appraisal of 250K at 2.875% (APR 3.13)


Origination Charges  $4,391
Points 1.875%    $3,141
Processing fee    $900
Underwriting fee $350

Sundry fees I don't feel like listing: $789
 (appraisal plus rinky dink items like flood det., certification, credit monitoring etc)

Title related fees: $1,734
Recording/Transfer Tax fees: $202

Total $7,116  (Ouch, when I see this writ large I fear I've messed up)

Outcome: payments stay roughly the same with 25K cash out.
Reasoning for Refi: Security of cash cushion in an uncertain world. Would like to add 2nd bathroom to owner's unit in preparation for move and hold in 1-2 years (Large 3br Unit will rent for substantially more with 2 bathrooms).

Thank you for weighing in with your experiences. I'm a fan of these forums and enjoy the insights handed out here like king-size candy bars on Halloween!


-RLT
Are you planning on holding the property long term?  For a 30 year mortgage, I look at it like itís a payment in perpetuity.  As Iím holding these properties basically forever, or at least thatís the plan.  I really donít care much about how much how much gets added on to the loan. I look at mine from strictly cash flow.  So, if you can get 25k in your pocket for the same payment, Iíd jump right on it. 

If you plan on selling in the next 5-7 years, Iíd skip the refi. 


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J Boogie

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #13 on: December 01, 2020, 01:28:00 PM »
No need to start a new thread! Papa Bear gave you some good advice.

If you'll allow it - I'll hijack my own thread and question the logic to add a bathroom. Your numbers suggest you're in a LCOL area where upgrades should be very carefully considered especially if they aren't DIY. If you DIY it and use mostly low cost or salvaged materials then putting a few thousand into it is kind of a no brainer, but if your intended space isn't adjacent to an existing plumbing stack and you have to hire a plumber or electrician then it can easily become an investment that doesn't pay off for a decade.

I'm guessing you could rent it out for ~1200 currently and you envision getting an extra 120 or so with another bathroom?

ResolLaTot

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #14 on: December 01, 2020, 02:21:49 PM »
Thanks for responding @Papa bear . Your mindset, considering the cost of the refi as simply an extension of the payment timeframe, is helpful. I was looking at the 7k+ cost and thinking...What Have I DONE Why am I taking a ~30% hit (25k * .30 = 7,500) to get 25 grand of my own equity?!

The tricky part is answering your question: how long do I intend to hold this property.  At time of purchase, my intention was to hold forever and manage from afar if I left the area. Five years in, I'm conflicted. This refi's a fork in a really boring "Choose Your Own Adventure" story.  My property FEELS like a very good investment that I should hold onto - it is the nicest home I've ever lived in, and my tenants cover PITI+. But a house hack is not the same animal as a pure investment property.

 -RLT

ResolLaTot

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #15 on: December 01, 2020, 03:56:20 PM »
No need to start a new thread! Papa Bear gave you some good advice.

If you'll allow it - I'll hijack my own thread and question the logic to add a bathroom. Your numbers suggest you're in a LCOL area where upgrades should be very carefully considered especially if they aren't DIY. If you DIY it and use mostly low cost or salvaged materials then putting a few thousand into it is kind of a no brainer, but if your intended space isn't adjacent to an existing plumbing stack and you have to hire a plumber or electrician then it can easily become an investment that doesn't pay off for a decade.

I'm guessing you could rent it out for ~1200 currently and you envision getting an extra 120 or so with another bathroom?

Thank you for being a willing participant in your own hijacking JBoogie! Interesting. I would like you to convince me. It would be much easier to NOT do it and yet I feel compelled. Here are my reasons:
1. Quality of life.  It is a 1700 sqft apartment with two levels. It is a bummer getting out of bed and going downstairs to use the bathroom. So from a pure livability/laziness standpoint an upstairs bathroom would be an improvement. But if I am honest, it is unlikely I will be living here 18-24 months from now.
2. Desirable Tenants. This is a 3-4 bedroom place (plus a very small bedroom that I'm aiming at for 2nd bath). I think 3-4  friends are more likely to share a place with two bathrooms.
3. The place feels like it is SUPPOSED to have another bathroom. This actually worries me. I may find that there is something about the property's configuration or structure that makes it prohibitively expensive to add one.

as for expected rent differential... I think it is more like $350/m, 1300ish vs 1700ish.
My comps are: next door neighbors pay 1600/m for smaller 3br/2BA.
My downstairs tenant happily pays $1050/m for a two bedroom/1BA. He thinks we could get 1200/m for his spot, but I don't raise rent on tenants who cook us delicious things, watch our cat when we are out of town, and enjoy a porch beer with us now and again.

I am in a LCOL rustbelt city - but it is trending upward.  Hard to tell what will happen long term but this neighborhood is desirable for walkability, proximity to downtown, entertainments.

 I am DIY curious, but adding a bathroom is probably not the right project to get my feet wet on. I'd hire this out. The bedroom is located above the bathroom downstairs but the footprints don't coincide perfectly.  I need to get a pro in to investigate feasibility.

Thanks for pushing me to think this through. Does getting a 350 return instead of 120 change your mind at all?

  -RLT
     

Dicey

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #16 on: December 01, 2020, 04:08:14 PM »
I haven't read all the replies yet, but we recently decided to look into re-fi's for our rental properties. We contacted all the lenders mentioned on this forum and a few others. What we found is the fees are astronomical right now. DH spoke to someone at his Credit Union who told him that she was writing loans in investment properties for 3% with no fees last June/July. She advised him to wait. Today, my CU finally got back to me with pricing and fees. The rates were good, but the fees were nearly $7k per property.

BTW, my CU person did suggest we do a cash-out re-fi on our primary, paid off home, and pay off the rentals. WTF? Absolutely the worst advice ever. Why would I encumber my home with non-deductible mortgage interest debt to pay off the rentals, where all the interest is deductible? Because that's a loan that would have been easy for her (or, more fairly, her firm). No thank you very much.

I think we're just going to wait until Spring and see what happens.

ResolLaTot

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #17 on: December 01, 2020, 05:39:41 PM »
Thanks @Dicey , sounds like you were quoted about the same figures as me. 
I am moving forward with some reservations.

Question about your breakdown of deductible interest on rentals vs primary.  I'm about to reveal my ignorance here, but isn't the interest on a primary home loan also deductible? I know you have some serious real estate jiujitsu, tell me what I'm missing.

Papa bear

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Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #18 on: December 01, 2020, 07:00:40 PM »
No need to start a new thread! Papa Bear gave you some good advice.

If you'll allow it - I'll hijack my own thread and question the logic to add a bathroom. Your numbers suggest you're in a LCOL area where upgrades should be very carefully considered especially if they aren't DIY. If you DIY it and use mostly low cost or salvaged materials then putting a few thousand into it is kind of a no brainer, but if your intended space isn't adjacent to an existing plumbing stack and you have to hire a plumber or electrician then it can easily become an investment that doesn't pay off for a decade.

I'm guessing you could rent it out for ~1200 currently and you envision getting an extra 120 or so with another bathroom?

Thank you for being a willing participant in your own hijacking JBoogie! Interesting. I would like you to convince me. It would be much easier to NOT do it and yet I feel compelled. Here are my reasons:
1. Quality of life.  It is a 1700 sqft apartment with two levels. It is a bummer getting out of bed and going downstairs to use the bathroom. So from a pure livability/laziness standpoint an upstairs bathroom would be an improvement. But if I am honest, it is unlikely I will be living here 18-24 months from now.
2. Desirable Tenants. This is a 3-4 bedroom place (plus a very small bedroom that I'm aiming at for 2nd bath). I think 3-4  friends are more likely to share a place with two bathrooms.
3. The place feels like it is SUPPOSED to have another bathroom. This actually worries me. I may find that there is something about the property's configuration or structure that makes it prohibitively expensive to add one.

as for expected rent differential... I think it is more like $350/m, 1300ish vs 1700ish.
My comps are: next door neighbors pay 1600/m for smaller 3br/2BA.
My downstairs tenant happily pays $1050/m for a two bedroom/1BA. He thinks we could get 1200/m for his spot, but I don't raise rent on tenants who cook us delicious things, watch our cat when we are out of town, and enjoy a porch beer with us now and again.

I am in a LCOL rustbelt city - but it is trending upward.  Hard to tell what will happen long term but this neighborhood is desirable for walkability, proximity to downtown, entertainments.

 I am DIY curious, but adding a bathroom is probably not the right project to get my feet wet on. I'd hire this out. The bedroom is located above the bathroom downstairs but the footprints don't coincide perfectly.  I need to get a pro in to investigate feasibility.

Thanks for pushing me to think this through. Does getting a 350 return instead of 120 change your mind at all?

  -RLT
   
For 350 extra a month, I would consider spending 15k for that new bathroom.  Thatís a pretty decent return and is likely what youíd have to pay to add a modest bathroom from scratch.

As for mortgage interest, your rental interest is an expense.  It always nets against your revenue.  As for primary residence, itís only deductible in so far as you can get above the standard deduction on schedule A.  This was made immensely more difficult with the latest tax code changes.   Realistically, your interest deduction on your primary really isnít worth much at all. 


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J Boogie

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #19 on: December 01, 2020, 08:28:39 PM »
I've been charging my in laws 1000 for their 2bd/1ba since 2015 and my duplex has a taxable value of 390k, so hopefully that explains how off I was in assessing your numbers.

Sounds like the bathroom could be a solid investment. Fuck it, as long as you're opening shit up add a top/bottom laundry. Shouldn't require too much more in cost if you already have to run new plumbing and electric you might as well. My in laws have had that on their wish list for a while but I think they also like the friendly rent so it might just remain on the wish list until they move out and I convert the attic to add a master suite.

Dicey

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #20 on: December 01, 2020, 08:45:32 PM »
Thanks @Dicey , sounds like you were quoted about the same figures as me. 
I am moving forward with some reservations.

Question about your breakdown of deductible interest on rentals vs primary.  I'm about to reveal my ignorance here, but isn't the interest on a primary home loan also deductible? I know you have some serious real estate jiujitsu, tell me what I'm missing.
Although I am a card carrying member of the Don't Pay Off Your Mortgage (DPOYM) Club, when DH and I married, we each sold our much appreciated (long term mortgaged) homes and paid cash for one together. I suppose technically that means we didn't pay of this mortgage. Funny, during this re-fi process, someone lender asked us for proof of mortgage payoff on our primary and we had to tell them that no such document existed.

As far as mortgages go, the absolute cheapest loan money is for the initial acquisition of you primary dwelling.

I hope this answers your question. Feel free to ask more and also to visit the friendly, helpful folks over on the DPOYM thread.

J Boogie

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #21 on: December 01, 2020, 10:51:04 PM »
For many, the interest on your home loan doesn't factor in. The standard deduction especially after the Republican tax cut makes it irrelevant for the majority of taxpayers.

Whereas you deduct all expenses from your rental income.

J Boogie

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Re: Owner Occupied duplex - Any lenders offer rates similar to SFH?
« Reply #22 on: February 02, 2021, 12:49:05 PM »
Update: I am finalizing 2.875% with Amerisave. My principal went from 248 to 255. I had 50k worth of HELOC that I rolled into it which
 made it a more expensive cash out refi technically. 4,500 of the fees account for prepaid insurance and initial escrow payments. Things went quiet for a bit during the holiday break but got rolling smoothly soon after.


The difference between 4.5% and 2.875% is pretty substantial on a monthly payment. My principal and interest is now 1,058 on a 255k balance and it used to be 1,107 on 218,500.

I was able to kill my mortgage insurance fee of 78/month as well, which is awesome.

So if any other Owner Occupied duplex owners are out there looking to refi, I believe AmeriSave has the best rate.