Closing costs are 8% of the half a million I'd be cash out refi

[Jack B.]

My long time broker's fees were 20K per property or 80K. So I went to Aimloan, who originally quoted me 5K per property or 20K total for the four. Now I get the disclosures and they are 10K each, basically 40K or 8% of the 500K I'd be getting back. I'm really having second thoughts about this. That seems pretty steep.

I wanted to cash out refinance to a lower rate and use the proceeds to buy more rentals rather than using cash on hand, but now I'm thinking I'm better off just waiting to sell in a year, if the economy is in the toilet still, rates will still be low, and this way I'm not paying fees to cash out refinance AND sell a year or two apart. Too much money going out for this.....

I just didn't want to use cash on hand and tie it up in real estate, but now I'm thinking just wait to buy after selling some of these and doing another 1031 exchange instead.

With that I DO have the cost of selling and the cost of buying new and the nominal 1031 fee's, which would technically be more than the cash out refi, BUT...I wouldn't have to sell for years to come as the properties have new plumbing, siding and roofs (I bought them that way).

Thoughts? Go through with the cash out refinance?

[Jay Hinrichs]

Originally posted by @Jack B.:

Originally posted by @Nadia O.:

Yes that’s a rip off! Have you ever thought about using your loan mortgage company directly? No need for broker fees + closing cost. I’m about to take out refi as well. And they only quote less than $2k to process + $500 for appraisal if needed. I’m taking out the money to purchase another property. So we are in the same boat.  shop around & tell them if they can offer lower.

 Who are you using? A national lender?

keep in mind if the fees are low they are baking it into the interest rate..  but 4 to 5 k per file is pretty standard a loan company simply cant stay in business if they are not at least making that amount..  with points junk fees etc.. plus service release premiums they garner.

keep in mind you have lenders title policy and all the escrow costs.. which is probably 2k at least per file.. then you have what the mortgage folks are going to make.. Now 10k per file I think something is wrong there that is way too much i agree.. but 4 to 5k thats pretty standard if its way less than that then the interest rate is higher.. and the lender gets paid with the service release premium.