What percent should closing costs be on cash out refi of $140K

[Toben B.]

Hello,

I have 3 duplexes to cash out refi on. All are worth $200K. One is free and clear, one I owe $5K and one I owe $35K.

What should closing fees, points, appraisals add up to? I am seeing $7400-$8400 in closing cost options.  That is around 4.5-5.2% of the loan and seems crazy high to me. Where should these number be?

At 6.75 % - $7330

$4,329.00 Closing costs
$25.89 prepaid costs
$2,975.00 discounts which I assume is another word for points

At 7.125 - $6281

$4,329.00 Closing costs
$27.33 prepaid costs
$1,925.00 discounts/points

Do these look right?

Thanks in advance!

[Jon Puente]

Hey Toben,

Let me help you with this really easily, as you can break down closing costs into 4 main parts (for any loan):

A) Upfront Fees and Discount Points - This is charged based on the rate YOU choose. The lower the rate, the more expensive it gets.  The higher the rate, the less expensive it gets.  This is the only cost that is lender specific because each lender has different profit margins on loans.  Some might charge 2K in points for a 6.99%, while another might charge 0$ in points for a 6.99%. 

B) Appraisal and Misc Fees - This is typically anywhere from $500-$850 for any loan, does not matter the lender.

C) Title Company Fees - This will be fixed because its based on the title company you choose, not the lender.  If you want cheaper title costs, then select a different title company.

E-G) Prepaids and Escrow - This is based on what your taxes and insurance will be in your area, not the lender themselves.  If you want cheaper taxes and insurance, then find a property with cheaper taxes and insurance costs (like moving further from the city).

The only one that is going to vary (and sometimes drastically) is the upfront fees and points, which is all you need to know for shopping lenders.  Everything else is relatively the same. 

Great Question!