What stands out to you on this initial cost worksheet?

Question

Background context:

I have a 805 credit score, low DTI and attempting to secure the lowest cash out refi to pay off a debt ($50k). My broker is saying the broker fee is a standard $3000 amount bc the amount requested is under 100k and advised the minimum I am able to to pull out is $75k. The property is paid off, fully remodeled and has a tenant in place whose rent exceeds the monthly loan amount. I am attempting to refi under a DSCR loan proposed interest is 8.375%. Estimated closing cost is $7776.80 on a $75k washout refi. Does any of this sound valid?

Brittany Minocchi · Answer

Fees realtive to a low loan amount are always going to seem high - a lot of them are fixed and don't vary based on loan amount. It's not uncommon to pay higher origination fees for smaller loans, although you're over 4 points here....it sounds like this particular broker has a $3,000 minimum, which isn't extraordinarily high. Can you find someone to do it for less? Probably. You can take a loan estimate or fee sheet from one lender/broker to the next, and there will almost always be someone willing to undercut the previous person just to win the loan. That doesn't mean they are the best option to CLOSE that loan. If you've been happy with whoever you're working with, they communicate well, are responsive, look out for your best interests...that's important to consider too.

If you have an 805 and low DTI, assuming you can also qualify with employment history and income....check out a conventional cash out instead and compare.

Jay Hurst · Answer

A conventional loan proving you income along with the subject property income. You would get significantly better terms.

Elias Halvorson · Answer

Have you considered a personal loan? I’ve gotten an 80k personal loan before with SOFI and believe their Current rates are around 8.75. I think it’s a flat 300$ doc fee. Those fees do seem a little high but as folks have stated before, that’s not too high considering the low loan amount.

Jonathan Taylor · Answer

@Kevin Vasquez what you are being offered is close to par on what you can expect for a low value refinance. A declining PPP is standard for DSCR loans (3/2/1). Local banks would be your next bet if you want something competitive but you would run into the same issues with loan value. I would say, you may be able to get lower rates than mid 8s as my lenders are high 7s for a similar scenario but you may be tripping over dimes to save nickels.

Jay Hurst · Answer

@Kevin Vasquez   You would also need to ask what the pre-payment penalty is on the loan. DSCR loans can have ridiculously long PPP. and why DSCR in the first place?

Brandon Croucier · Answer

Most go down to 75K and charge a minimum fee for their time. I sent you a PM on what I can do.

What stands out to you on this initial cost worksheet?

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