$5800 closing cost for SFH $85k

[Gaby Liu]

Hi everyone,

I am closing on my first rental property in Indiana and this is the closing cost details that two lenders sent me. The property is $85000 and I am putting a 25% down payment on it. The total closing cost is $5600/$5800

which seems excessively high in my opinion. Are there any fees here that are out of the norm. Thank you for all of your help in advance.

[Jim Blackburn]

@Gaby Liu

1. First issue is just 20% down.  Generally with investment properties, buyers put down 25% to get the best rate. 

2. Second, both are charging discount points which it seems you could find a lender without points. 

3. Both have estimates for Owners Title (which is normally paid by seller) unless it's REO or short sale.

4. Neither have shown the seller tax proration credit that you may get at closing from the seller. 

5. Did you realtor negotiate a 6% ($4800 seller credit towards your closing costs and escrows)?  He/she should have just increased the purchase price and asked for the credit back to keep 5k more cash in your bank account after closing. 

Otherwise, in general, the closing costs do not seem high at all with either lender. For example, when I finance properties in Florida, and New York, closing costs can be $10,000 - $50,0000 because the states have hefty mortgage tax.  Welcome to the world of Real Estate Investing and Financing.