23k to refi??!!!!!

[Raquel Brown]

I’m at a total lost right now! 
l was just told I would have to pay 23k to refinance a portfolio rehab loan on two properties. 
they are only lending 70% LTV, my rental rates are $1785 and $1985, but the market rents in the areas are only $1400/1450.

I really wanted to keep these as rentals so I’m trying not to give up. 

The interest rate they gave me at us 7.70%, 5/1 ARM, rent to debt service ratio is 1.21

My credit score is 672. Loan amount is 283,500 for the two properties, origination fees are around $4,300. 

Property 1: ARV: 185k appraisal came back at 179k

Property 2 ARV: 230k appraiser came back at 226k

any insight will be great. Or lender recommendations. My goal was to do a rare and term. Wasn’t looking for any cash back in this market but definitely wasn’t expecting 23k to refinance these two deals. 

[Patrick Roberts]

Quote from @Raquel Brown:

Ones located in Greensboro Nc and the other is located in reidsville Nc 

the fees I see on this soft quote are: origination fee, underwriting/processing fee, 3rd party closing costs, 6 month tax impound, 6 month insurance impound, looks like 11-12k in fees alone.  

both homes are rented already for several months 

It's not clear if this is one or two separate loans.

$4300 in origination fees on $283k is 1.5% for a commercial loan - sounds about right, maybe a bit high. 1% is mostly the norm. Also, this depends on the points.

UW/processing/lender fees are typically around $2k per loan (DSCR), give or take. This depends on the lender and what is charged in the orig fee. This includes the two appraisals at $500-$750 each.

Attorney costs are usually $1500-$2500/transaction, including lender's title policy and whether it's a new policy or a true refi. If this is 2 separate loans, then 2x this.

6 months of tax and insurance escrows per property are not really fees. These are costs you're going to pay regardless. My guess is 2 months' worth is to establish reserves, and the rest is prepaids on these. Depends on when your tax and insurance bills are paid. Whether you escrow now or pay out of pocket later, the net costs to you are largely the same. Not much wiggle room here, other than asking to not escrow (this will likely cost you).

Your FICO is below 680, so it wouldnt surprise if you're also buying down the rate with points. I would dig through your docs to see what you're paying in points. Given the Fico on this deal, this is probably the biggest lever you can pull to reduce the total costs.