Things are moving forward on both the purchase of Rental #2 and refinance of Rental #1. I got the good faith estimates from the mortgage broker and, as some had suggested, the interest rates were a tad higher than I planned. The rate on the loan for Rental #2 is 7.25%, not the 6% I had used in my projections. I'm not too concerned with this however. Based on the existing $439 a month rent, the higher interest rate drops my ROI down to 10.9%. However, the lease is up June 1, at which time, my property manager believes I can easily raise the rent to $460 or more. At $460 a month, the ROI goes back to 13.4%, close to the 13.8% I estimated originally. Escrow is scheduled to close on June 1 or sooner, so I may be able to get the higher ROI from the start.
The rate on the refi of Rental #1 is 6.75%. The figure I used for my calculations was 6.25% and the difference is less than $25 a month, something I can live with easily.
Both loans are standard 30 year, fixed rate mortgages. I asked the mortgage broker to look for 5/1 ARMs, since he thought some could be found with interest rates a quarter point or so lower, but with the small loan amounts, no one was interested.