Mortgage Fee Estimation

[Austin Parks]

Hello All:

This is my first post on BP, so bear with me.

I am putting together a cost benefit analysis for single family rental properties. I would like to estimate financing costs from the mortgage (fees, title seach, etc) but I do no have a lot of practical experience here.

For those that do, is it reasonable to estimate financing costs as a percentage of the loan amount? If so, what percentage?

Thanks.

Austin

[Jon Holdman]

I use a rule of thumb that the non-loan closing costs will be 2% of the purchase price. I think that's actually high side and it may be closer to 1%. The 2% of the loan amount is probably pretty close. 1% for the typical origination, plus another $500-1000 for other fees, plus an appraisal (around $500 these days), plus the lender's title policy. The owner's title policy is typically paid by the seller.

[Austin Parks]

Thank you very much, Mr. Holdman!

Austin