Importance of Closing Costs

Posted on March 23

Question: I got a quote and the closing costs total to $7400, which seems a bit high to me. We bought an investment property for 57,000, got a hard money loan and got liens totaling to 8,500 and just put tenants in the home who are paying $895 for rent. So, the total we want to refinance is 65,500. Credit is at a 725, why are the closing costs so high? Is this normal?

Answer:
I must admit $7,400 in costs for a 65k loan sure seems steep. Do you have a GFE? When did you take title? For conforming no-cash loans, you’ll need to have at least 6 months on title.

Presuming your payoff includes the ‘construction costs’; it should not be considered cash-out; however, you would need to be on title for 12 months.

Presuming you have title vesting sufficient for the type of loan you need, it sure looks like, you should be able to obtain a favorable rate and origination costs of under $2,000, add escrow set-up, title and any taxes/recording.

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One thought on “Why are the closing costs so high?”

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