Rental Property Investor · New Haven, CT · Member since 2019 · 9 posts · 2 votes
So I recently found a two family house in Connecticut that I put an offer in on and after negotiations we settled at $150,000 with $5,000 back toward closing costs. Taxes are $5600 a year. The issue I have is with the estimated closing costs that my lender sent me. The listing stipulates that this home will not qualify for regular FHA, ( which I dont agree with) so it will need a rehab loan, hence the 203k. The estimated closing costs are $18,000 which does not include the 3.5% down payment. This seems way to high to me. Any thoughts or advice is greatly appreciated.
So I recently found a two family house in Connecticut that I put an offer in on and after negotiations we settled at $150,000 with $5,000 back toward closing costs. Taxes are $5600 a year. The issue I have is with the estimated closing costs that my lender sent me. The listing stipulates that this home will not qualify for regular FHA, ( which I dont agree with) so it will need a rehab loan, hence the 203k. The estimated closing costs are $18,000 which does not include the 3.5% down payment. This seems way to high to me. Any thoughts or advice is greatly appreciated.
Can you post a breakdown of the fees so that we can see what the fees are exactly. This way we can better assist you.
There are normally additional origination fees because of the complexity of the process, but that is really high still. Are you including your prepaids in the closing costs?
@Shaun Weekes so it actually did include my 3.5% down. Also it is high because of the 203k process. I'm hoping it will get approved for a regular FHA as the house isn't that bad off.
Do the loan app, get the appraisal....if the repairs are minor, and you know You can close, fix the issues yourself, out of pocket, have the appraiser rrinsoect, close.
@Wayne Brooks I was thinking about going that instead cause ll of the extra fees an headache of the 203k. It seems like 203k only works for property's in horrible condition and a lot of room to build equity
I bought my SF primary residence with an FHA loan 3 years ago. $235k and the closing costs were $14k with my 3.5% down. $18k does seem like an awful lot. Don't be afraid to walk from the deal or from that lender. Just my 2 cents.
Matthew - I agree that the closing costs appear high. I am happy to review the Loan Estimate (with absolutely zero obligation) to help you sort thru what's under the hood. As well, we can talk about any work-arounds to bypass the 203k process (love those loans but always better to avoid them if possible). Let me know if I can help. Kit