Need to reduce closing costs (Chicago purchase)

9 Replies

I have bought a few rentals in the Chicago area and am put off by the considerable closing costs, especially from the title company.  I'm looking at something right now and the down payment is $18,000 (20% down) and the closing costs including estimated lender fees is over $9,000.  Going with a non-traditional lender looks like there's a reduction in lender fees, but I don't know what to do about title costs.  

Any thoughts?  Would going all cash help with title? 

@Patrick Britton wow that is exceedingly high. Can you provide a break down of the 9k in costs? How much is lender and title? Any transfer taxes? I buy something for 80k, I pay 800 in underwriting fees and so forth, 1000 in title fees, then the usual taxes and insurance. All in, including prepaids I’m at about 4k

so this also includes prepays and escrow account.  sorry for the formatting...and yes, i round up and am a little on the high side of this (but not too far off)

closing costs $9,378


Loan costs
loan origination $360
application (high) $250
appraisal (high) $750
lender fees $1,764


Title costs
attorney fees $650
chain of title $250
closing fee $1,000
closing protection letter $50
title policy update $125
electronic fee $40
endorsements $175
endorsements (other) $175
title document fees (high) $225
overnight and recording fee $50
lender's title (high) $525
wire fee $50
Taxes & Gov't $815
recording (high) $140
transfer taxes $675



Pre-paids
homeowner's insurance (high) $733
pre-paid interest (high) $345
Water Bill (City of Chicago) $372


initial escrow payment
homeowner's insurance $122
mortgage insurance $0
property taxes (high) $553

I am seeing that you are pre-paying insurance, but also making monthly escrow payments for your insurance as well? Also, why are you paying an Attorney fee and a closing fee? Unless the Attorney fee was for other doc review?

Originally posted by @Patrick Britton :

so this also includes prepays and escrow account.  sorry for the formatting...and yes, i round up and am a little on the high side of this (but not too far off)

closing costs $9,378


Loan costs
loan origination $360
application (high) $250
appraisal (high) $750
lender fees $1,764


Title costs
attorney fees $650
chain of title $250
closing fee $1,000
closing protection letter $50
title policy update $125
electronic fee $40
endorsements $175
endorsements (other) $175
title document fees (high) $225
overnight and recording fee $50
lender's title (high) $525
wire fee $50
Taxes & Gov't $815
recording (high) $140
transfer taxes $675



Pre-paids
homeowner's insurance (high) $733
pre-paid interest (high) $345
Water Bill (City of Chicago) $372


initial escrow payment
homeowner's insurance $122
mortgage insurance $0
property taxes (high) $553

I counted title company costs of 3315.  That’s insane. I bought an 80k house earlier this year and paid 1300.  That’s everything.  I’ve now gotten it down to even less at another title company of 900-1100.  I see you’re not from Chicago, are you dead set on investing there? The property taxes, high water bills may make you want to reconsider.

@Caleb Heimsoth well, once you get over the closing costs the cashflow is pretty unbeatable.  But i am always interested in other ideas.  and property taxes within the city of chicago aren't too bad, nor is the water.  i like the water as it's based on house size, not usage, at least where i own.  

did you have an area in mind i might consider?  

+1 on running an application with another lender.  

 I am almost done on the refinance of a cash purchase. At the benigning,I told the lenders I was shopping around for the best rates and the absolute lowest fees.  I pulled five quotes/credit pulls.   

I shared proposals among lenders and asked them to lower their fees, match interest rates, and keep third party fees down.  After three rounds,  I received lower fees and a $1,000 closing credit. They all matched rates and credits after seeing the others loan estimates.    Some didn't want to play this game.

One of them was at $4,000+ in loan/title fees and I negotiated them down to about $1,400.

They make a lot of money on your loan,  they should work for it. 

Frank

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