Lowest Closing Costs On A Cash Out Rental Property Refinance?

Question

Hello,I'm curious what closing costs and fees were tied into all of your recent cash out rental property refinances....and with what bank/lender you refinanced with?I am planning a cash-out refinance on my rental property to fund the down payment of an FHA loan for a multi-family home that I plan to reside in for a year while renovating. Considering my current APR is a ridiculous 8.125% this refi will be very beneficial!!!Anyway, I spoke with a loan officer today and this was the estimated break down...100,000 Home Estimate80,000 Maximum Loan (80% LTV on rentals)68,000 Current Mortgage Balance3,500 Closing Costs8,500 Remaining for my Cash Out.I was hoping to be able to walk away from my refi with 10k in my pocket, but unless I can find a bank or lender with lower closing costs, I don't see that happening.Please list your bank or lender, and the total in closing costs that were applied to the refinance.Many thanks!!

Jared L Getz · Answer

Chris Mason, Yeah I forgot all about loan estimates. It's been 8 and 1/2 years since I've been down this road. I'll start making some calls and see what's what. I'm really grateful for finding BP. Not to be all sappy about it, but you guys are amazing. I can't tell you how much all this helps. Thank you.

Chris Mason · Answer

@Jared L GetzA problem with smaller loan amounts is that many of the closing costs do not scale up and down with loan amount. An appraisal for a $100k home costs the same as an appraisal on a $500k home, for example. Title insurance goes up and down a little with loan amount, but the rest is mostly fixed. We can also adjust interest rate upwards to cover closing costs, but basis points are tied exactly to loan amount, meaning it is not viable at all for smaller loan amounts. Going up 0.125% to rate might yield 0.4% of loan amount as a credit, which will be $320 for you and $4,000 for a Bay Area million dollar loan. And the appraisal on that $1.25m purchase very well may be the exact same appraisal fee that you pay.If you presently have an escrow account, and are going to continue to have one, a huge chunk of that $3500 might be funding the new escrow account. But you will get a refund from your old escrow account in the mail, so it's a wash and not really a "closing cost" since you'd have property taxes regardless of having a mortgage or not.

Jared L Getz · Answer

Chris Mason, that's good information and does give me something to keep in mind when I shop some closing cost estimates. Unfortunately for them, I doubt that they were considering my escrow account at all. They actually said fees would be around 3,000 and if I were to continue with the application process there would likely be another 500-1000 added to that. Now that you mentioned my escrow, it would be safe to say that would be at least part of what the "additional" costs would come from. It anyone is interested, the link below is to an article really breaks down the closing costs...http://homeguides.sfgate.com/average-closing-cost-...Here is a quick run down of price ranges in general...appraisal fee.....225-400loan origination fee.....75-300 (or 1% of loan amount)credit report.....15-30title search and title insurance.......450-600legal fees.....75-200survey (although less likely to occur).......125-300.Adding up all the "maximum" estimates comes to 1,880. I think I'm going to ask lenders to break down their fees for me just for comparison.

Chris Mason · Answer

@Jared L Getz, that's what a loan estimate is for. Anything in Box C, as it states you can pick those service providers if you so choose.

Eddie T. · Answer

I have a lender in pa if you need one

Jared L Getz · Answer

Many thanks for the input Matt. I had a feeling I was getting scammed on that one. I've been looking into this a lot online, and filling out some generic forms, and as a result a random lender that I won't mention by name contacted me....not the other way around.And to answer your question....No. I have had this property for 8 years now. Thanks again, and any specific closing costs and with which lender or bank from anyone else is still appreciated. Particularly if the refinance was within the last 12 months.

Matt Turbitt · Answer

$3500 on a refinance is robbery, especially on an 80k loan. My last one was $650. Look around more, theirs no need to refinancing where the loan currently is held if that's who quoted you.Edit this is not for a house you've purchased in the last 12 months that you are trying to cash out based on the ARV after a flip right?