How to calculate on the refinancing process

Question

Hi BP'rs!

I'm a new investor looking to get started in RE but I have a question regarding refinancing when doing a BRRRR ...

When refinancing the home, is there a way to estimate your closing costs and fees etc? Also, what is the average that the interest rate changes by when you refinance?

I feel these are critical things to know when analaysing a deal.

Any feedback would be most helpful!

John Leavelle · Answer

@Matt Koury

I have not had to use a Hard Money Lender yet.  But, the ones I looked into did require a LLC for the loan.  Many others here on BP have said the same.

Matt Koury · Answer

No, I will use my own cash for down payment, and hard money for the purchase. It will be my first deal, but I'm looking for a lender that's already in the game and has the funding I need. I rate this is my best bet in getting finance, and possibly some guidance on whether the deal is good or not, considering an experienced lender in RE won't finance a deal that looks dodgy.

Why do you say I need a LLC to close with a HML?

Noted, definitely will get pre-approval on a refinance loan

@John Leavelle

John Leavelle · Answer

@Matt Koury

You cleared up my confusion.  I was saying you can not use conventional financing for both initial purchase and Refinance.  Hard Money up front and a conventional Refinance works.  Are you using your cash for the purchase?  Not down payment?  It is usually the other way around.  If this is your first deal you may find it difficult to get a Hard Money Lender to finance it.  Plus, you will probably have to get an LLC to close with a HML.  Be sure to firm all that up before you put a property under contract.  Also, I recommend you get pre-approved for the cash-out Refinance loan prior to purchase.  If you do both it will make the whole process go smoother.

Harjeet Bhatti · Answer

You can compare the closing cost by talking to two different lenders. If you know your credit score they can give you estimate on the phone. Interest rate change everyday and sometime 2-3 time in day.

John Leavelle · Answer

@Matt Koury

Not sure what you are referring to when you say "what is average that the interest rate changes ".  How do you plan on purchasing properties?  Cash? Hard/Private Money?  Conventional loan?  Sounds like you are planning to use conventional financing.  If so, that doesn't fit with the BRRRR strategy.

Matt Koury · Answer

Perhaps that is something I need to try, thank you for your response!

Joshua Manning · Answer

Most of those things you can learn by talking with a loan officer. I think talking with one at a local bank about future refinancing opportunities before purchasing your home might help you out.

As for closing costs I know there are closing costs calculators that you can use online. I don't know how reliable they are though