Do these terms sound right to you guys.

5 Replies

Biggerpockets,

I just bought a home through conventional financing a few months ago. Now I'm looking at a duplex that I want to get a conventional loan on but make it my investment property. In order for me to get this duplex I'm eyeing using conventional terms are as follows:

Subject property is 93k

 I will need at least 20% down no if and's or but's.  I will also have another $2600 in pre-paids that cover the mortgage for 6 months and 7k in closing costs. Also asking the seller for 2% seller assist. This will put me at approx 26k for normal financing.

So I asked him why is the closing cost so high and he responded:

Bank fees are approximately three to $4000, transfer tax is 1% of the sales price, and title insurance is typically 1% of the sales price.

Does this sound fair?

I'm I able to get a FHA loan and make the duplex my primary residents fro a year and then rent it out? Remind you I bought a home a few months ago with conventional financing.

Please assist...

Hello and you have asked a good question Charles!  I do want to give you my opinionated answer.  Understand that you are speaking to a Bank and they are trained to take advantage and they will making a good investment with your money with the down payment and the other fees they charge.  One thing they have that helps them is typically the interest rate charged which is typically lower than other Lenders but I have never heard or have seen any person ***** about the interest rate they were charged and it was responsible for and why they failed. 

Over the last few years I have learned much since I am bedridden and do not currently work.  The more units in your investment, the better.    Do not believe that you need to have any experience before buying apartment complexes.  With those there is less competition and the possibility of making more money and one vacancy dues not hurt so much like residential multifamily does.

Good luck to you!

@Charles Coaston , I would contact a mortgage broker in your area, and get a second opinion.  It sounds like he has a specific loan type he is wanting to place you in, vs what might be best for you.  I know those 20% down on an investment property no ifs ands or buts is not always true.. I'm closing on a place once the title issues are cleared..  that will be my fourth investment property and I'm not only not putting any cash down I'm taking equity out for repairs and rolling a truck loan into it as well.  

Originally posted by @Charles Coaston :

Biggerpockets,

I just bought a home through conventional financing a few months ago. Now I'm looking at a duplex that I want to get a conventional loan on but make it my investment property. In order for me to get this duplex I'm eyeing using conventional terms are as follows:

Subject property is 93k

 I will need at least 20% down no if and's or but's.  I will also have another $2600 in pre-paids that cover the mortgage for 6 months and 7k in closing costs. Also asking the seller for 2% seller assist. This will put me at approx 26k for normal financing.

So I asked him why is the closing cost so high and he responded:

Bank fees are approximately three to $4000, transfer tax is 1% of the sales price, and title insurance is typically 1% of the sales price.

Does this sound fair?

I'm I able to get a FHA loan and make the duplex my primary residents fro a year and then rent it out? Remind you I bought a home a few months ago with conventional financing.

Please assist...

 Transfer taxes should be the same regardless of the lender.

Title insurance may vary some, but you may be able to work the title attorney for a lower rate.  Try going through the same title attorney you closed your first property with so they can see you're getting serious about your portfolio and want them to come along with you on the journey.

Be careful.  If you just purchased a property, you may have signed a disclosure stating the property was owner occupied and would be for a specific period of time.

Your closing costs seem a bit high, but without the value of a loan estimate, I'm thinking you're mixing up prepaid interest and taxes with setting up and escrow account and maybe lender fees too.  You should not have 4K in lender fees unless you're buying the rate down.

A hard money lender gave me this quote and Im trying to figure if its a good deal also, its on a 2 fam building in upstate Ny, if anyone can give advice please respond to me publically so other people can lean as i am. thank you. im going to try to post this on other threads because its time sensitive

 Loan Amount: Total loan amount of $63,750 or 65% of After Repair Value, whichever is less (Subject to appraisal, inspection, applicant interview and additional underwriting. All required plans must be approved prior to funding, if applicable). Initial Disbursement of $21,250 (which consists of up to 90% of purchase price). Rehab holdback of $42,500.

Loan Term: 12-month interest-only balloon note.

Payments: Interest-only monthly in arrears with balloon payment

at maturity.

Interest Rate: 9.99% fixed interest rate

Collateral: A first priority lien on Borrower’s fee simple interest

in the Property and the improvements thereon

together with any personal property owned by

Borrowers related to Property

Prepayment Penalty: none

Loan Fees: The following fees shall be due: (1) 3.00 points, plus

customary underwriting, processing, legal,

administrative and site inspection fees to (**) at closing

of the loan; (2) $50 application fee due upon signing of

the term sheet. This fee will cover credit, background,

and initial valuation reports (all of which will be shared

with the borrower). Upon appraisal being ordered an

additional $350 application fee will be due and

credited towards closing costs if the loan closes. If the

loan fails to close this fee will be forfeited.

Closing Fee Schedule

  • Lender Points
  • $250 Legal Review Fee
  • $75 Appraisal Review Fee
  • $30 Servicing Setup Fee
  • $30 Draw Company Admin Account Setup Fee
  • $1,250 Attorney Closing Fee **Draw Fee is $200 per draw and a $30 wire fee for each draw wire**