Question about closing costs

[Daniel Soovajian]

Hello!

I have a question about closing costs...I've reached out to 4 lenders and secured pre-approvals with each to compare their rates, fees, etc.

For a 25% down payment with 1 point on a $200,000 investment property, they're estimating closing costs between $7000 and $8000 (which includes prepaids, insurance, etc.). 

However, I notice in the BP rental calculator tool that it recommends I estimate closing costs to be between $1500 and $2500. 

Out of curiosity, I did a quick google search for "average closing costs paid by buyer" and am seeing that it's customary for closing costs to amount to 2-5% of the purchase price...so between $4000 and $10,000 for that $200,000 property. 

Should I just go with what the mortgage bankers quoted me or am I missing something? I just want to make sure I'm using the right assumptions when running my calculations.

Thank you!

[Basit Siddiqi]

@Daniel Soovajian

There are many items that encompass closing costs which you mentioned(title work, loan origination costs, prepaids real estate taxes, insurance paid at closing, appraisal, etc)

It should also be known that unless you are a week before closing - the lenders are providing you a rough estimate on what the closing costs will be. From my experience they are conservative and overshoot the costs.

The lender dictates loan origination costs and appraisal costs. 
Almost everything else should be at your discretion or same regardless of what lender you go with.

So if your goal is to shop for a lender - I would ask what rate he's giving you, his loan origination costs and the cost of the appraisal.
Also - you want to ask for similar loans across the lenders to compare apples to apples(30 year fixed, 0 points compared with a 30 year fixed 0 points).