Refi closing cost and interest rate too high??

Question

I’m in the process of refinancing two rental properties for the first time. My estimated closing cost and interest rate seem a little high.

Interest rate: 5%

Property #1:

ARV: 150,00

Closing cost $7,360. $2,727 are for escrow and 4,633 are closing cost.

Property #2:

ARV: 185,000

Closing cost $8,590. $4,006 are for escrow and $4,584 are closing cost.

Let me know your thoughts. Thanks in advance.

Taylor

JD Martin · Answer

Not terribly out of line, depending on your credit rating. Depends also on your state. A little high on the interest rate perhaps, but not completely in left field.

Steve Vaughan · Answer

What is the rate you are currently paying? 5% could be high or low.

What are the closing costs ($4633 + $4584) relative to the cash out amount you will be receiving? I need to keep my 'cost of capital' below 7%.

$9200 is a lot of money.  Translated to freedom, that's 3 weeks of naps for me.  Is it worth 3 or 4 or 5 extra weeks of working? I translate all costs into freedom costs.

Amy H. · Answer

@Taylor Eldredge I just rate locked for two cash out refi’s at 4% but I am buying them down a little. I’ll pull out equity and my mortgage payments will actually decrease. How many banks did you shop? I think I did about 10 before I found terms I liked. Maybe keep looking!

Steve Vaughan · Answer

My max cost of capital is 7% as stated.

$9200 for $50k is more like 18.4%.  $9200 also represents weeks of freedom to me.  The answer is no way.

Taylor Eldredge · Answer

@Steve Vaughan I currently have an adjustable-rate @ 6.5% so I definitely want to get out of that.

Should be able to cash out about 40-50k at a 75% LTV.

Based on these would you consider the refi worth it?

Thanks

Taylor Eldredge · Answer

@JD Martin Great news. I just wanted to make sure before I went through with the refi. Thank you

Refi closing cost and interest rate too high??

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