discount points and >80 LTV - Posted by Jay Hartwig
Posted by Jay Hartwig on June 21, 2001 at 16:59:27:
Hi, all. I posted a question regarding loans to another forum, and found this forum is much better suited. I recently signed a contract for a 5 year old HUD home in MS; $91k. I wish to use it for a rental property. The rental and housing market is great, with prices appreciation very well. The rented home is worth $1125-1150/month. I have been shopping for 15 year fixed mortgages. Currently, best deal is 6.625% and 1.5 points. On top of that, this deal is from my own local bank. My question is related to the down payment. I am prepared to make a down payment of 20%. However, I have the option of going to 90% LTV, with a hit of 1 point. Additionally, I have the option of going with even lower rates with discount points ranging as high as 4.5 points. I wish to carry out the loan to at least 10-12 years. Any advice? Higher points, higher LTV? On one hand, conservatism tends to make me put down the 20%, avoid the 1 point hit, and keep mortgage payments low, around $640/month, or less. The more aggressive side of me tells me to finance as much as possible. Allow someone else’s money to work for me, and keep my cash for more deals. I’m almost 2 years out of college, and following my parent’s footsteps. Their hard work and aquisitions have made my journey easier. I’m taking advantage of it NOW. I want to keep buying properties until I get tired of being a landlord, or until the sky falls.