Is this a good cash-out re-fi?

Appraised at 85K.
Current balance is 60K.
This was a rehab of mine. I have a 9 month note on it at 8.25% interest rate that expires this coming Oct. I have it on a lease/option with 550.00 a month coming in.

A mort. broker in town here has got me at 8.5% interest rate at 85% LTV with about 2,700.00 in closing costs and fees. Its a 2 yr arm on a first lien. My FICO is mid 7’s. Thoughts?


I’d imagine you only need a loan for a year or 2 since you have an option. Does that loan have a prepay? What happens if your tenant doesn’t buy? You may need to refinance. I’m thinking that the loan may have a steap increae after its fixed period.

Please break down the fees as listed on the gfe. If you are keeping the property short term, wouldn’t it be better to have less costs upfront by choosing a bit higher rate.

There was no mention of income/assets.

I’d imagine better terms are available just from the initial info given.

You do a lot of your business with local banks, correct? Have you thought about taking this deal to them?

How astute you are! Yes I do business with local banks and I will be visiting them as usual. I just wanted to see if this would be a decent deal from this broker to see how he works his business. I would rather see a 5 yr arm just in case my option doesn’t exercise. This would be the safe play. Its a full doc loan. Credit scores were 729, 721, 754.

The gfe reads…

Appraisal 275.00
credit report 20.00
broker fee of 500.00
tax service fee of 32.00
processing fee of 475.00
underwriting fee of 695.00
wire transfer fee of 32.00
arm endorsement fee of 75.00
admin fee of 50.00
closing escrow fee of 200.00
title insurance fee of 250.00
recording fees of 53.00

Estimated closing costs of 2656.04
Interest for 15 days @ 16.8253 equals 252.38
Hazard ins fee of 30.00
taxes and assessment reserves of 150.00
Total equals 2908.42


Fees look in line Nate, rate is probably as low as it could get.

The local banks may give you that 3 or 5 year balloon. If you do use the local broker just make sure there’s no prepay. It sounds as if that is a “subprime” loan which they almost always do. Another thing about subprime loans is that most guidelines have a 6-12 month seasoning period on the new value. You’re borderline on that.