help with understanding closing costs for sfr under contract (IL)

[Nick S.]

hi everyone,

after 2 years, i finally got an sfr under contract. the 1st one i had to back out due to the home inspection and after a year of burnout, i've been taking advantage of these work from home times to find another.

i'll provide as much relevant numbers as possible. i also wouldn't mind a breakdown of this deal.

below are deal info and closing cost breakdown

purchase price: 185k in a really nice city in a very good school district, but the neighborhood is way under the median

repair: 35k

arv: 260-275k (my calculations were more conservative at 260)

average rent is: $2k, but i haven't yet decided whether to 2 year live in flip or brrrr. i'm leaning towards the 2 year live in flip so i can put down 10% and pay cash on the rehab

closing cost breakdown from initial lender who helped me with my preapproval. i plan to talk to a few lenders on wednesday

A: loan costs (application and lender fees): 1.3k

B: services you cannot shop for (appraisal fee, credit fee, other): 400

C: service you can shop for (this is where it gets really muddy for me): 4k

1) admin fee: 100

2) chain of title: 250

3) closing protection letter, electronic doc fee: 100

4) lender's endorsements (what the heck is this?): 350

5) lender's title insurance: 1.5k

6) settlement fee (what the heck is this?): 1.2k

7) title binder commitment, title search abstract, title update fee, wire transfer fee: 550

D: A+B+C= 5.7k

E, F, G (these i get): government fees, prepaids, escrow payment at closing. taxes are extremely high here in IL. they included a homeowner's insurance premium. should i shop for this myself? they estimated 133 a month

H: owner's title insurance (optional): 520 (should i be adding this?)

would appreciate any and all feedback soon to help me in my mortgage lender shopping conversations for wednesday

thanks!

[Zack Karp]

@Nick S. everything cost-wise looks kosher to me, including the C category.  Those are standard title fees, you can expect to pay around $3K as a buyer in Chicagoland.  The settlement fee is their closing fee.  Certain endorsements are required by the lender, a couple of these are extra layers of insurance that are required and you can't do anything about, mainly for zoning and environmental protection.  Title insurance should only be around $500.  The seller pays the owners title which is usually around $1500.  That lender has those two fees flipped.

Also my 2 cents, you can put 5% down, and maybe even only 3% down if you qualify.  Take advantage of sub-3% stupid cheap money.  OPM baby.  Use your own money for the rehab, and plan for it to go over budget, it almost always does.

Also there are ways to leverage seller credits and lender credits, and other strategies that your LO should be mapping out for you for maximum ROI on this project. If they are not doing that, you're working with the wrong lender. There is a difference between an order taker LO, and one who specializes working with investors and who is Team Nick and actually makes you money and has your back. You will know when you talk to the right one.

Best of luck!