Thread: Closing costs on investor loans have gone up?

I had 2 loans set to close today on 2 properties, to finance about $65k on each (No cash out). I was quoted 6.5% interest fixed for 30, with closing costs about $1800 a couple months ago. Now that I get to the closing day, and my good faith has been revised to $3300 closing costs. The broker is blaming the title company, and market conditions for the increased cost.

I'm a little flabbergasted, considering that this is such a puny loan amount -- I'd think the closing costs should realistically be around $1500 bucks... So I called Countrywide, who has carried the loans in the past -- Because I know they've done them for around $1500-1800 for me in the past, and they are telling me that to get the same rate through them the cost would be about the same. They are saying that market conditions have driven up costs on the investment property loans, since they are seen as riskier now that the real estate market has turned.

Anybody else experiencing this? Any mortgage brokers want to weigh in?

- Hakrjak

What is your LTV on these deals are they purchases or Refi. Here is what we do. You both are talking about using secondary market money. We use only commerical lenders. The process is must faster and the cost are almost zero. The last deal we did we did not even have to pay the filing fees to record the deeds of trust against the properties.

If you have good credit, income and a tract record look at some of your smaller banks that have commercial loan officers. Do not go to the big banks such as US Bank, Wells Fargo. We have done deals with them most of them in the million + range.

The commercial lender at a smaller bank many times has the authority to approve the loan himself so there is no loan committee or it has to go to underwriting to be approved.

The rates are a little bit higher and only fixed for 3-5 years with a 25-30 amortization, but the cost are much much lower.

An example would be you get a loan at 6.5% for 30 years and pay $3000 in closing costs. With a commercial lender you may get the loan at 7.25% with $500 in closing costs. It would take you about 4 years to recapture your $2,500 that you had to outlay for the additional closing costs

I hope this helps!