When is a refinance to expensive?

[Jared Crouch]

I am planning on refinancing a rental property worth approx $200K (current loan of $108K) I would like to take out $30K in a cash out refi. The fees for this transaction are around $4500. That is around 15% of the total cachet amount. Is this too costly to refinance at this point?

I plan to use funds to purchase more units. 

Thank you in advance. 

[Robert Sepulveda]

unfortunately, that's the cost of doing business in Texas nowadays. about 3.5% of your total transaction is reasonable. if you waive your escrow account, that could reduce your reserves you're required to impound, and reduce your closing costs. It will usually cost you 1/4% or so on your rate...sometimes nothing at all.

You can work with a good broker or banker who can give you a slightly higher rate and credit you several thousand in closing costs if you'd like to offset. Just see what makes more sense for you. Lowest rate vs total cost rolled into your loan.

[Jared Crouch]

Thank you for the response. Actually this property is located in CA, just outside of Los Angeles. 

[Robert Sepulveda]

Ok, that may be a little high then. I would review your gfe (good faith estimate) with other sources and see where the extra cost is coming in from. That number may be possible if they're paying a tax installment for you, but it's hard to say without seeing what the itemization is.