Cash out Refi - Loan Fees and Costs, What is reasonable?

[Ikenna Okafor]

What amount of fees are expected these days in a cash out refi? How much is reasonable when it comes to loan fees? I had planned to do a cash refi on one of my investment properties, but the fees are too high. With the appraisal paid for and done; at 75% LTV, I am only gonna be getting around $68k in cash but the estimated closing cost is $5,522. (Includes $4,720 in loan cost and other fees). This figure does not include another $1757 for Homeowners insurance and taxes which is a given. Is this reasonable?? Any inputs is very much welcomed! TIA

[Andrew Postell]

@Ikenna Okafor I don't know your total loan amount but these seem like pretty reasonable fees for a cash out mortgage here in Texas (there might be some improvement possible depending on the loan amount).  A cash out mortgage will require title insurance (probably the largest fee you pay) and attorney fees, doc prep, etc. etc. etc.  A cash out mortgage will be a 30 year fixed rate....again, depending on your loan amount your rate will be in the 5's.  

There is an alternative product which will be hard to find in Texas but a "Line of Credit" is an alternative.  They have lower fees but it is a very different product.  A line of credit is almost like a credit card attached to your house.  You can draw money out, use the money, then pay the line of credit back, and then reuse it again and again.  It's a great product for flippers.  Lines of Credit will carry an interest rate of about 6-7% and it will be a Variable Interest Rate. Please don't get this confused with a HELOC (which has lower rates but it only for your primary home). Since the rate is variable, you do not want to be in the product for a long time. After about 10 years the Line of Credit will "mature" into a different loan and the rate will increase even further. Again, a good product but not designed to carry a balance for a long time.

There are pros and cons to everything I guess but feel free to private message me if you have any other questions on it.  Thanks!