I am wondering about closing costs on loans. I am finding it quite expensive to take out a loan whether it is 80/20, 90/10, or 100%. I know there are always costs involved, but is there any way to get a loan with reasonable closing costs, or am I just dreaming? I’m working on buying a rehab with a loan and using home equity loan to rehab. Rates are around 8% for loan and over $3000 just to close the loan. Any ideas? Graciez
Sounds about right. What is the loan size?
that sounds right buyers have to remember that the loan officer/broker donot work for free in the closing cost includes the loan officer fees. That is a good deal to me $3,000 dolars it means the loan officer did a pretty good job
Some brokers may consider lower closing cost for frequent loans. Sending one person all your deals could give that broker an insentive to lower fees. You could always pay more in the rate as well to lower your closing cost (which I am sure you already know).
Thanks for the info, Graciez
I wish I could close for $3000 Im doing the same thing with using equity loan to rehab.That price sounds great!Michele
I find closing costs especially difficult to stomach as well but its part of the game. I’d say 3K is actually decent - we’ve paid up to $5K before.
Glad to know I’m not the only one!!
I’d be glad to compete. Feel free to send me a loan scenario sometime.
Keep in mind that you are paying closing costs one way or another. You can pay them upfront on in rate. Lenders that give you a loan with no closing costs or low closing costs are simply charging a higher rate. In some circumstances this works out well if there is no prepayment penalty and the loan is intended to be short-term.
My situation appears different than others on this topic. I utilize my home equity loan on my personal residence to acquire my rehab properties. Once the rehab is 90% completed I contact my local bank and place a non - owner occupied home equity line of credit on that property. This has worked extermely well. I closed a equity loan yesterday, and today I close on my next rehab. The total cost of the equity loan is $0. The only disadvantage is an ealry payment fee of $250 if the loan is paid off within 3 years. Current rate is 7.50% The only problem I will run into is the debt to income ratio becoming too high. I currently can afford about 3 properties at once. Which is plenty to keep me busy.
No matter how you look at itIf yuo dont have the cash under your mattress your gonna pay to borrow it.The whole key is to find the cheapest lender and or processec (title co.)shop shop shop till you drop and find the lender ,title co. ,appraiser,and so on that your comfortable with and stick to them.
in looking at closing cost you ahve look at what it cost to close the deal and what is getting apid to the lender. Things like tax stamps, closing atty fee, recording fees, etc are going to paid even if you show up to closing with a roll of Ben Franklins in your pocket.
the thing to watch out for is “junk fees” for lenders. they can be really clever with their names these days. with that said, the more people that touch the paperwork of your deal, the more you got pay. Everyone has buy groceries and pay rent/mortgage; no one is working for free. While I have had plenty of times of walking out of closing steamed over some the charges, I keep focused on the overall deal and how to make it successful and profitable.
aak5454, thanks, Graciez
While I have had plenty of times of walking out of closing steamed over some the charges
If you are dealing with a reputable Lender/Broker you should never be “steamed” or “suprised” over the closing costs. You should have been aware of them from the beginning when you received the GFE.
The rate and points HAVE to be as quoted. Let me clarify my point.
I’ve done a couple of dozens loans in the past couple of years with a whole range of lenders and brokers. Quite frankly, the Good Faith Estimate (GFE) has turned into a joke and is not what it was 10 yr ago. People padded the heck out of it then if you call them up and ask for explaination they say “ah, don’t worry about it, those are just estimates”. What I am talking about is the ever increasing creative range of fees and charges that are layered into all kinds of things. I’m not talking huge numbers, but those $50 and $75 charges here and there add up. This may seem petty, but does a broker/lnder need to charge me $35 FedEx fee when it only cost him $18 to send docs across (I have my own FedEx acct so I know what the rates are). Its not the $17, its the fact they (the lender/broker) feel the need to mark-up shipping charges 100% when they are already making THOUSANDS of dollars on my transaction?
Secondly, every by the time you get the GFE, you are several weeks into the process and restarting with a new lender (who will pull your credit again) is a not a great opinion (particular if you are commited to a 30 day close). A great example of this a couple month back. A broker “forgot” to disclose his $1500 (!!!) broker fee until I got the GFE (granted, I for got to ask, but it did not show up on his written document he sent me showing rate and points, etc). I was suppose to close in 10 days and had a the Seller on my case. I had to go forward.
IMHO, this where we need to migrate to a fixed “package price system”. I know there was talk of this a few years back but it seem to die off. While I realize that different lending situation have different charges, etc, I would be interested to hear brokers/lenders opinions on this.
Ok, I step off my soapbox and get back to work…
BTW, I just did a couple of loans directly with BofA and they had a very clean HUD-1 with no garage fees. I call my loan officer after we closed and complimented him that BofA keeps things simple (their docs package is about 1/2 thickness of some other lenders). Hopefully others in the industry will follow.
junk fees suck and can be negotiated.
origination fees suck and can be negotiated, but it helps tremendously if you are bringing the lender/broker frequent business and / or referring other people to them.
underwriting fees suck and can be negotiated, but it helps if you are bringing the lender frequent business.
Points don’t suck so bad if it’s a long-term deal and you’re buying a lower rate.
appraisal fees suck and can be negotiated, and it helps if you work with the same appraiser for all of your deals.
taxes and insurance suck, but not much I’ve ever figured out to do about it.
repeat business means that they know you, know your credit issues, how good you are to work with (always be organized and “put together”) and that saves them time/heartburn on the deal. they know that they will still make money on the deal because they know that they won’t be wasting a lot of their time on the deal. plus loyalty figures in there somewhere.
"Makin’ a livin’ not a killin’’
Thats why its always best if you can get the seller to hold the mortgage!! ;D Banks are horrible but in this business we need to use them and they know it thats why they abuse it
or go with a lower LTV like 75%. i dont think people realize that loan officers work commission only. most offices dont even provide leads. you want to you loan officer fight for you, make them hungry to get the best they can for you, throw the dog a bone. i am willing to bet that if the officer is charging 2 pts on the loan or even 3 pts on the loan or even 4 pts, what they are making is far less than what you will make in the end. dont be greedy.