Refinancing 4-unit property, is this fee normal?

Question

I'm working on a cash out refi of a 4-unit property of mine. I'm seeing an origination charge that is 2.5% of the total loan value, which together with the loan points comes to 3% of total loan value. My broker is telling me this is because cash out refis on 4-unit properties are more risky, and there's nothing he can do. Am I crazy to think that these fees are too high? My rate isn't even spectacular at 4.375%.

Kevin Chan · Answer

I don't know what the loan value is, but part of the reason could be-

I think the costs don't really scale linearly.  So, the % of loan value changes a lot if, for example, it is $3000 on a $100k loan vs $4000 on a $400k loan.

Sam Mitchell · Answer

@Chris Mason I understand some of those words... haha. You're in Oakland? I'd love to talk more if you're open to it.

Sam Mitchell · Answer

That includes just the points. Closing costs are over 5% of loan amount. I wonder if that is just a function of the loan itself being small.

Allan Smith · Answer

My loans on average cost 2.4% of the whole loan amount. That includes all points appraisals fees Etc. So if those percentages you refer to include everything, you're doing okay. If that is just the points that is way too much

Chris Mason · Answer

Here are the typical discount point adjustments for a cash out refi 70% LTV conforming loan amount 4plex investment:

You can also google "FNMA LLPA" and manually add them up from the PDF you will find.

That's what you'd end up paying in points to get the vanilla owner occ 20% down SFR high FICO, etc, rate out of that particular bank (the "Jesus walking on water" type scenario everyone advertises their rate for), in spite of these specific loan characteristics ("NOO" stands for non owner occupied, ie a rental).

You can:

- Pay that ridiculous amount of points.

- Take a higher interest rate to absorb the points.

- Split the difference, which it looks like is how yours is set up.

I usually give folks at least 4 or 5 options, but different folks have different styles. Unclear on why someone would flat out refuse to show you options (including the ridiculous one), it's not like we get compensated based on your points or interest rate these days.

Sam Mitchell · Answer

That's a good point. It's a relatively small loan - 141k, about 4.2k in fees. Still curious if people feel that is high.

Refinancing 4-unit property, is this fee normal?

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