Cash-out refinance dilemma

[Christian Carson]

I have to decide what to do about refinancing two of my duplexes, and the banker is pressuring me to return my application, but closing costs are really hard to swallow. Here's the situation.

Duplex A

Value $90k
Loan: $30k, 5.25%, 30yr ($171 pmt)

Duplex B
Value $90k
Loan: $36k, 2%, 10yr ($343 pmt)

The bank has told me they will write me two $63k loans at 5% for 30 years. The problem is that the quoted closing costs are between $3200-$3700 per loan. This is a whole lot of money to spend just to pull out about $50k.

I have some private money loans I would like to extinguish and I have other opportunities that I would like to pursue, which is the motivation for releveraging.

In the alternative, if I wait a few months I can get an 8% 10yr HEL (fixed) or a 6% 25yr HELOC (variable) from another local bank with no closing costs.

Am I pursuing a bad deal? Should I wait?

[Doug McLeod]

First of all- tell the guy to back off.  No rush.  Is the bank including prepaid insurance and some taxes for escrow in that quote?  Those may be what is making the closing seem high. Around 3k is about right (in Houston anyway) for that size loan. 

You may get less LTV on a HELOC. What if you refi only one, then pay off the other and do a HELOC on that one right away? Or find a private lender who is happy with 5% APR and give them the opportunity instead of the bank.