Hello, I am working on my first deal. I am planning on flipping it. Home appraised at 110K. I shorted it for 70K. I am putting 20K down (IRA). financing 60K (extra cash for closing costs, etc). My mortgage guy gave me a good faith estimate where I am to pay 5K in closing costs. This sounds outrageous to me. I am getting a nodoc loan, paying 8% interest and 1 origination fee point. My credit is 710. Does this seem right? I feel like I am getting fee-ed to death. No, I haven’t shopped around, and perhaps I will call him tomorrow and say that I am . I am not obligated to mortgage guy in anyway, am I? I have signed no paperwork. I have only paid for an appraisal that the mortgage co ordered. Any guidance would be appreciated.
1pt origination is normal, and actually for such a small loan 1pt is great.
Does the 5K include escrows? Meaning tax and insurance. If you are not escrowing then yes 5K is high for a 60K loan, but if you are escrowing then that probably includes one year of insurance plus three months of insurance and taxes. I would check with another broker or two and have them review your GFE. That is a decent rate for a no doc investment property even though you are putting down almost 30%. It is always a good idea to get a second opinion.
Does the house need any work or can you put it back on the market immediately? If it is in a marketable state right now, you may consider flipping it for 20K under market value and getting a quick sale. That way you may be able to do a double close and not have to go through the drama and expense of closing twice. If it does need work, have you figured out how much it’s going to cost and where that money is going to come from? You may have to include repair money in the loan. Just something to think about…
Thank you for all your replies. I am planning on a quick flip, however, I have not figured out a way to double close here in Houston. I am planning on finding a buyer at 20K below market value. House just needs a carpet cleaning/ pulling. I have a few prospects lined up. I am presently having a hard time getting financed since my self directed IRA is not so investor friendly as they proclaimed. I will post this situation in another post. I think noob should know what they are getting into when they get the “self directed IRA”.