Hello, a friend and I are interested in starting a real estate investment business. We need to figure out how much we can afford. I have talked to a mortgage lender and was stated that I would need a 20% downpayment. However when I asked about closing cost the person stated, “The rates varies depending on the loan amount, down payment, etc…”
Can some of you from your experiences tell me what fees/cost are associated in getting an investor loan for the price of $50K, $100K and $150K?
The hell with that guy. Shop around and find a better mortgage broker. My broker does so many commercial mortgages that I give him a call and he gives me a fairly accurate estimate of all the costs involved for the different programs out there and how much he thinks he can get me based on the financials. I have a gov’t insured mortgage application going through right now and because he has so many of the same applications going on he got me a group discount on the environmental report (at least $200 bucks less than the quotes I got from phoning a dozen engineering companies locally).
Because it’s gonna vary from area to area depending on risk. You don’t mention a specific area in your post. What it is for NYC is gonna be different from Detroit. Are you too lazy to contact more than one mortgage broker?
Something is off here.
Thank you for your reply. Yes you are stating the same thing as the other person, it depends.
Well just for simplicity, would it be possible for someone to just state how much your costs were.
Your mortgage amount, interest rate, closing cost and any other cost in relation to the mortgage as an investor instead of a homeowner.
As Dave responded, the second time, it is impossible to give you numbers as there are too many variations. you need to find a good mortgage broker. Then you can provide the parameters and they will be able to provide you with some scenarios.
The cost of your mortgage is vary greatly. There are many programs out there and unless your going FHA the cost will vary from broker. If I am correct FHA is a fixed cost regardless of broker (someone can chime in on that)
Factors that will effect your closing cost are, FICO score (higher the better), downpayment, interest rate (do you want to buy down points) broker fees (cost for them to do loan), and loan product and how long you want to lock in the interest rate that just quoted you.
Some fees will be the same or very close regardless like an inspection, title ins, taxes, etc.
All brokers are required to give you a GFE (Good Faith Estimate), however this will not be given till your credit is pulled and information given.
If your looking to do alot of deals, find a couple good brokers and always shop and compare. Some will do loans cheaper by taking points off without raising the interest rate much.
From experience a loan in Florida cost me about 5% of the purchase price.
Lets look at hard money equity lenders on a 100 k deal…
Value of 100k will loan 65k Gross…
Points… 10 = 6500.00
Appraisal… just their cursory review…250.00
Escrow fees…650.00 total both sides
Title Policy for purchase…900.00
Title Binder for resale…90.00
Alta Policy for lender…425.00
Grant Deed Prep…25.00
Trust Deed Prep…25.00
Recording deeds…28.00
Wire fee Acceptance…30.00
Transfer tax…110.00
Natural Hazard fee…55.00
So you have about 9k in fees associated to a Hard Money Equity Loan, and although there could be adjustments by area… this is a safe number.
Your Lender, as stated, are required to let you know of the costs before lending… Also the fee that will adjust is the points based upon the lender type…
There are more than loan costs in a closing. In addition, you have prorated taxes, prorated rents, title insurance, filing and recording fees, HOA fees, prorated city bonds (maybe), escrow company charges, deposit transfers, new insurance (which you’d better have before title changes hands), and possibly several other expenses.
You might be required to do assorted environmental studies, and structural inspections. Apraisal fees are paid in escrow.
Your broker can not tell you what your closing costs will be until he knows what property you are buying and what kind of loan you are getting.
My closing costs on residential have varied from $300 to $5,000, if that helps you at all. I have very good credit and get cheap loans. If your credit is less good, you might be paying more points and more interest, and the bank might very easily require 1-2 payments in advance at closing, in addition to the points.
One very good way to counter the costs that youll have is by buying at a steep discount… Also try not buying through an agent and most definitely try and not using cash or credit…