These loan numbers look right?

9 Replies

Hey BP fam, 

So I'm under contract on an investment property, and here are the numbers I'm being quoted. Trying to determine if they look right for someone with great credit.

$200K purchase price

20% down

5.75% rate

30 yr fixed

Origination charges - $2295

Title fees including owner's title insurance - $1625

Thanks!

Nothing looks alarming to me.  Especially if you are a first time investor.  Would you mind revealing the lending institution?

@Curtis H. Nothing out of this world. Keep in mind that you should always shop around. Ideally, you can use the services of a broker to get you a soft quote. Alternatively, you might be able to get better terms if you have a good relationship with a lender (read: you've given them business before).

is the subject property a condo or a SFR ( this will make a difference ) …...what is your credit score ? …. if orig charges are the loan fee ..this seems high for a 5.75% fixed rate ….the owners title fee is the sellers responsibility ..there are likely many other fees involved like appraisal / credit / buyers title ins etc ….

Originally posted by @Curtis H. :

Hey BP fam, 

So I'm under contract on an investment property, and here are the numbers I'm being quoted. Trying to determine if they look right for someone with great credit.

$200K purchase price

20% down

5.75% rate

30 yr fixed

Origination charges - $2295

Title fees including owner's title insurance - $1625

Thanks!

Doing 20% down on an investment SFR, instead of the standard investment 25% down, is a non-trivial rate hit. Works out to ballpark 0.25% to rate and .25 to discount points. If you're going to do that, I'd consider going all the way and take an even bigger hit for 15% down, knowing that you're not getting optimal financing anyways, and will likely refinance once you have 25% equity through appreciation/improvements/etc.

@Stephanie Irto

It is a SFH.

@Dave Skow

Credit is 785-790. 

@Chris Mason

I actually was going to do 25% down, and at that down payment we are looking at 5.25% rate. I really probably go that route. What seems to jump out a little at me were the fees more than the rate. Not that they are terrible, like mentioned above, but I'm a pretty safe bet as a borrower with the reserves I have, so I want numbers that reflect that. None of it would make me jump ship, I just will negotiate the fees down a little. 

Originally posted by @Curtis H. :

@Stephanie Irto

It is a SFH.

@Dave Skow

Credit is 785-790. 

@Chris Mason

I actually was going to do 25% down, and at that down payment we are looking at 5.25% rate. I really probably go that route. What seems to jump out a little at me were the fees more than the rate. Not that they are terrible, like mentioned above, but I'm a pretty safe bet as a borrower with the reserves I have, so I want numbers that reflect that. None of it would make me jump ship, I just will negotiate the fees down a little. 

 Here's a quick tip that can prob save you $1500-$2000:

Hey Mr. Seller, since you're picking the title and escrow companies, why am I paying for it?

(In SoCal, escrow and title are different. In NorCal and Bay Area, they are amalgamated.)

In reality, the listing agent is probably picking. But she likes her people, so she will find a way to frame it such that the seller agrees to it, since she likes her people.

If they come back and say "great, you pick then!" -- seek out the jenkiest most non-credible title and escrow companies there are. Maybe they use call centers in the developing world instead of locals, mention that (or rather have your agent do so). Listing agent might (correctly) come back with "F that noise, I'll just kick in from my commission..."

It is incredibly rare for a consumer to have an opinion on title/escrow (which has inflated their fees, relative to what they do, for years now), so no one has any scripted go-to counters. 

Good luck. :)

@Chris Mason

Thanks for the tip! I'm going to try it, although I think its too late since I signed the contract before reading this. Not that it can't be amended easily, but it feels like bad form at this stage.