Are these normal numbers on a loan disclosure?

[Aubrey Ford]

Trying to do my first deal and I just recieved a loan disclosure that breaks my deal. With a 714 FICO, 20% down on a $65k purchase they are quoting   a rate of  8.5% , adding 4.5 loan points, and a total of $8,825 in closing costs. All this for a $52,000 loan?  I didnt expect greatness in these times but it feels like these numbers are crazy. Any thoughts from the community on these numbers? 

[Randall Alan]

@Aubrey Ford

Your challenge is that this is a very small loan (compared to a more typical loan size of $100-300k).  On smaller loans there isn't as much profit in them, so lenders and brokers may charge more to make it worth their while to write the loan for you.  

Traditional lending for investment properties in my area was in the 7% range last time I checked.  Hard money was in the 10-11% range.  You don't say what type of lender you are getting this quote from ... so it's a bit hard to tell how great / bad it is.  For a hard money lender it looks about right... and the rate actually looks low.   A couple of points would not be unusual in todays market for a traditional lender as well.  Keep in mind that 4.5 points is $2,340... whereas on a $200,000 loan it would be $9,000.  I know that's sort of obvious.. but the point is that on such a small loan the fee as a dollar amount doesn't look so out of proportion.  Also, your FICO score, while descent, isn't 'outstanding'... so you are probably taking a little bit of a hit there as well.   

I guess it depends on how they are breaking up their other fees.  If they are then stacking on a processing fee, a document prep fee, etc I would go back and press back on them that the points look high given the profit they are adding in the other places.  Many of these things are open to negotiation if they think they are going to lose the deal.  But my guess is that they will counter with the size of the loan warrants the extra expense given the low profit margin.  You can always shop the loan at a couple of different places and see who comes out on top.

Wish you the best!

Randy