High Closing Cost - Anny Suggestions?

Question

Hi all, I'm currently under contract for my first rental property in South Florida and I'm finding that the closing cost provided seems high for a smaller loan size. I've attached a picture of the fees worksheet which total up to $10,230. Is there anything we can negotiate down in the fees that I may not recognize (never really seen a fees worksheet before as this is my first rental property) ?

Thanks for any feedback!

LaMancha Sims · Answer

Next time, negotiate any and all fees when you get your "Term Sheet" to review and sign. That way there are no surprises about how much cost(s) are prior to closing. This will ensure that your long term profits margins are where you need them to be as it relates to the loan part of the deal. Also, make sure that you get your own attorney to help you work thru these types of transactions. Real Estate investing takes a team effort to win.

Steve Vaughan · Answer

I like to use community banks and CUs  I do business with when I can. They are direct lenders and support your community.

Thank you for bringing up the costs of borrowing. It's not discussed enough, especially in arguments of cash vs leverage.   People argue leverage is 5 to 1 like their loans are free or something.

David M. · Answer

@Jack Dephillipo

Yeah, like I said, I'm not a fan of mortgage broker's when you have a non-complex loan situation.  Whether its a "big bank" lender or a non-deposit lender, their flat fees make much more sense when getting a loan.  Then, once I found a good loan officer, I just stick with him/her.  Like I said, if you have time/ability I'd switch and get the loan directly instead of going through a broker.  Good luck.

Andrew Bang · Answer

This is normal for going thru a broker.   You got a 30 year, 3.625% for a rental property.  2 points plus underwriting and attorney fee.  Its not the worst loan, there are some better options out there, but this is a common loan that alot of brokers advertise.  If the broker was easy to work with and didn't require alot of paperwork and underwriting, got it done in less than 30 days, I could see how they could justify the 2 points.  I don't see anything out of place.

David M. · Answer

@Jack Dephillipo

Holy smokes!!  am i seeing this right?

$157,519 Loan amount

$3290 mortgage broker origination

$995 underwriting fee

$2400 hazard insurance premium

Well, here is another reason why I don't use mortgage brokers.  Most lenders should be around a ~$1k flat fee.  Brokers want a percentage, and this one wants a huge chunk!  I'm guessing since its FL the hazard insurance premium is for a hurricane or something?  The rest looks okay.  Although, if you are going to be paying for an attorney, I would have paid for my own instead of the bank's.  That is just kinda stupid setup...

I suppose the only reason to justify the mortgage broker is you have some special circumstance and you couldn't find a lender on your own...

Also, i see you see this is the first time you've seen this.  By Federal law, he should have given you a similar break down up front when he gave you the initial estimate.  Its part of TRID.  So, maybe you rubber stamped it.  The only thing I see from what I understand of your situation is hurry up and get another lender to sell you the loan and just dump this one.

Valerie Kerste · Answer

@Jack Dephillipo Your Origination Fees Are High. Make sure to price these out going forward when lender shopping.

Nick Rutkowski · Answer

@Jack Dephillipo

Ask for seller concessions to help with the closing costs. It’s pretty common to do.

Marty Calhoun · Answer

@Jack Dephillipo

I have been in mortgage lending for over 20 years, I can not make out the fees but did read the comments.  Like they said, everything really depends on your fico, debt to income, the loan to value and type of loan (Conforming vs Non-Qm), the fees and rates can vary wildly.  If you only have a fees worksheet, this means your rate is not locked.  Rates has shot up over the last few weeks, so I wonder if this rate is still available?  Also FL does have some additional state and title fees other states do not.  I would be more than happy to help you out with any other questions, making your first purchase is a huge step!

Good luck!

Jack Dephillipo · Answer

@David M.

Thank you so much

Jack Dephillipo · Answer

@David M. @Andrew Bang This is 30-year primary loan... The property is a duplex and plan on living in one side so we were able to lock in the lower rate... If this was an investment loan I could understand the 2 points but that's not the case.

High Closing Cost - Anny Suggestions?

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