How does our loan quote look?

Private Lending & Conventional Mortgage Advice
10yFollow

How does our loan quote look?

Chad S.
Email Marketer · Chicago, IL · Member since 2015 · 33 posts · 6 votes

My wife and I are looking to invest in a multifamily building on the north side of Chicago. We'll go from renting, to being landlords in an owner-occupied 3 unit building. Our real estate agent recommended someone at Guaranteed Rate for the loan approval. We met with him today and found out that we can get a 5% down conventional loan which is nice, because we thought we would have to go FHA. It was a lot to take in and we're not sure how great the overall loan terms sound. We can probably do about $40,000 for a down payment, and could qualify for around $650k this was just an example they gave.

Loan Program Quote

  • 5% Down
  • $500,000 purchase price (example)
  • $25,000 down
  • Interest Rate 4%
  • APR: 4.360%
  • Product: Agency Conforming FHLMC 30yr fixed Home Possible AMI > 80%

Example Monthly Breakdown

  • Principal & Interest: $2,267
  • Insurance: $150
  • Taxes: $677
  • Mortgage Insurance: $170
  • Total: $3265

Other

  • Lender Fees: $1,190
  • Appraisal Fees $450
  • Prepaid Interest: $780
  • 1yr insurance premium: $1,800
  • Insurance Escrow Reserves: $300
  • Tax escrow reserves: $4,602
  • Title Fees: $1,000
  • Owner's Title Insurance: $2,000
  • Lender's Title Insurance: $1,500
  • Transfer Taxes: $3,750
  • Recording Fees: $168
  • Total: $17,000 (according to the broker we'll get about $10,000 of that back in the first year)

Do we need a second opinion or do these numbers sound fair? Curious if anyone has any input.

0Reply
14 views

Most Popular Reply

Charlie Fitzgerald
Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
10y

That is a very good program and rate and all costs and fees look like they are in line and accurate. GRI is a very well respected lender and does a great job.

1Reply
See this reply in the discussion

12 Replies

Jump to latestLatest
  • Charlie Fitzgerald
    Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    10y

    That is a very good program and rate and all costs and fees look like they are in line and accurate. GRI is a very well respected lender and does a great job.

    1Reply
  • Chad S.
    OP
    Email Marketer · Chicago, IL · Member since 2015 · 33 posts · 6 votes
    10y
    Originally posted by @Charlie Fitzgerald:

    That is a very good program and rate and all costs and fees look like they are in line and accurate. GRI is a very well respected lender and does a great job.

     Thanks! That's good to hear, we really appreciate your input.

    0Reply
  • Charlie Fitzgerald
    Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
    10y

    My pleasure.  You are in good hands with them.

    1Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    10y
    Originally posted by @Chad S.:

    My wife and I are looking to invest in a multifamily building on the north side of Chicago. We'll go from renting, to being landlords in an owner-occupied 3 unit building. Our real estate agent recommended someone at Guaranteed Rate for the loan approval. We met with him today and found out that we can get a 5% down conventional loan which is nice, because we thought we would have to go FHA. It was a lot to take in and we're not sure how great the overall loan terms sound. We can probably do about $40,000 for a down payment, and could qualify for around $650k this was just an example they gave.

    Loan Program Quote

    • 5% Down
    • $500,000 purchase price (example)
    • $25,000 down
    • Interest Rate 4%
    • APR: 4.360%
    • Product: Agency Conforming FHLMC 30yr fixed Home Possible AMI > 80%

    Example Monthly Breakdown

    • Principal & Interest: $2,267
    • Insurance: $150
    • Taxes: $677
    • Mortgage Insurance: $170
    • Total: $3265

    Other

    • Lender Fees: $1,190
    • Appraisal Fees $450
    • Prepaid Interest: $780
    • 1yr insurance premium: $1,800
    • Insurance Escrow Reserves: $300
    • Tax escrow reserves: $4,602
    • Title Fees: $1,000
    • Owner's Title Insurance: $2,000
    • Lender's Title Insurance: $1,500
    • Transfer Taxes: $3,750
    • Recording Fees: $168
    • Total: $17,000 (according to the broker we'll get about $10,000 of that back in the first year)

    Do we need a second opinion or do these numbers sound fair? Curious if anyone has any input.

     GR is my preferred lender and I highly recommend them.

    That being said the loan program you are talking about is called the "community loan program" and while you may qualify, not every property does. It has to be in a specific census tract for you to be able to do that. So plan for FHA and consider it a bonus if you can do it. Here is the analysis I did for them when they had a choice between the two

    Podcast Guest on Show #132
    Second City Real Estate4.821 Reviews
    WebsiteView Page
    1Reply
  • Chad S.
    OP
    Email Marketer · Chicago, IL · Member since 2015 · 33 posts · 6 votes
    10y

    Hey @Brie Schmidt! Thanks again for all of your help before, the spreadsheets are a huge help. We know we may have to go FHA, but for the property to qualify for the 5% down community loan program, the property has to be in a "low to mid income area". We can check that on the FFIEC site. We plugged in our own address (which is right on the Ravenswood/Lincoln Square border) and saw we were in a mid income area. We love the area we're in, a half-mile walk to all the fun stuff in Lincoln Square.

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    10y

    I didn't see too much out of line fee-wise except one big thing - Lender's Title Insurance of $1500.  Isn't that just to ensure they get to the county recorder first?  So no one sneaks in and records a mortgage ahead of them?  On my last loan the fee was only about $241 on a $180k loan.  Maybe it's for something different?

    Also in my area, Owner's Title Insurance is generally a seller expense, but that's not loan-related, of course.   Cheers! 

    1Reply
  • Steve S.
    Lender · Los Angeles, CA · Member since 2015 · 800 posts · 229 votes
    10y

    Looks like an incredible deal IF you can get it. Conventional lending is such a brutal world to qualify so if you get that then run with it. 

    Just make sure you have a 45 - 60 day escrow while you wait around for no reason as they take 30 days to underwrite the deal. The clock on conventional is horrible. Pray you get done before Christmas at this point. This is the time of year where the underwriters, processors, doc drawers, title reps, escrow officers all simultaneously forget they have work to do and close people's loans. Instead the most important thing is "who is going to bring the green bean casserole to Aunt Suzie's this year" and "Tommy is only 6 so he still believes in Santa Clause. Let me tell you the drag of having to hide the presents and keep up the charade is". lol

    Best of luck! Protect yourself with a long escrow and long financing contingency period. You're going to need it.

    1Reply
  • Upen PatelPro Member
    Lender · Nationwide Lender · Member since 2015 · 1k+ posts · 814 votes
    10y
    @Chad S. Your rate and fees look good.


    [email protected]571-200-6180
    1Reply
  • Chad S.
    OP
    Email Marketer · Chicago, IL · Member since 2015 · 33 posts · 6 votes
    10y
    Originally posted by @Steve Vaughan:

    I didn't see too much out of line fee-wise except one big thing - Lender's Title Insurance of $1500.  Isn't that just to ensure they get to the county recorder first?  So no one sneaks in and records a mortgage ahead of them?  On my last loan the fee was only about $241 on a $180k loan.  Maybe it's for something different?

    Also in my area, Owner's Title Insurance is generally a seller expense, but that's not loan-related, of course.   Cheers! 

     Those are really good questions. I'm not sure how to answer right now but will look into it. This will be my first deal so it's helpful to know what questions to ask. The mortgage broker did mention that some of those closing expenses will be paid by the seller, I was just typing out everything that was on our print out. Thanks!

    0Reply
  • Chad S.
    OP
    Email Marketer · Chicago, IL · Member since 2015 · 33 posts · 6 votes
    10y
    Originally posted by @Steve S.:

    Looks like an incredible deal IF you can get it. Conventional lending is such a brutal world to qualify so if you get that then run with it. 

    Just make sure you have a 45 - 60 day escrow while you wait around for no reason as they take 30 days to underwrite the deal. The clock on conventional is horrible. Pray you get done before Christmas at this point. This is the time of year where the underwriters, processors, doc drawers, title reps, escrow officers all simultaneously forget they have work to do and close people's loans. Instead the most important thing is "who is going to bring the green bean casserole to Aunt Suzie's this year" and "Tommy is only 6 so he still believes in Santa Clause. Let me tell you the drag of having to hide the presents and keep up the charade is". lol

    Best of luck! Protect yourself with a long escrow and long financing contingency period. You're going to need it.

     Hey Steve! Thanks for the tip, we're trying to line everything up with our current lease (we're renting) expiring April 1, 2016. We do have the option to go month to month for 2 months beyond that in case we do need more time. We're also trying to save up as much as we can for the down payment and closing costs so we have 2 timelines to work against. Thanks again!

    0Reply
  • Chad S.
    OP
    Email Marketer · Chicago, IL · Member since 2015 · 33 posts · 6 votes
    10y
    Upen Patel Upen, thank you so much for your insights on our numbers. We appreciate it!
    0Reply
  • Max Matrin
    Montgomery, AL · Member since 2015 · 109 posts · 11 votes
    10y

    Great idea , Good . Can you tell me that more details . Actually i need a home loan for construction of my new home . But i cant understand to that how was I have to apply that with low interest rate . 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free