All Forum Posts by: Darrell Crosgrove

A 100 page mortgage on a $100K house?  

Title insurance? As I said, the house is not being transferred. If the deed was good yesterday, it is the same deed today--the lender is getting PRECISELY the same title they had yesterday, last week, and last year.  

And, everything else you said boils down to PRECISELY what I said--the mortgage company is generating a lot of fees IN ADDITION TO their advertised interest rate. Can you imagine going into a gas station with a sign out front saying gas was $2.59 a gallon, and when you went to pump the gas you first had to pay a $15.00 fee for using their pump, an $8.00 "lot fee" for parking you car in front of their pumps on their property, a $17.00 "roof" fee because there is an awning over the pumps, and a  $14.00 "snack bar" fee to cover the fact that should you feel the need for a cool refreshing beverage, you have the option of walking in and purchasing an Icee for $1.99?

Yes. I know. When you wish to borrow someone else's money, you have to pay for the right to do so. 

I mean, seriously, you felt a compelling need to state that?

What I object to is the fact that these "closing costs" have nothing to do with actually borrowing money. What they are is an EXTRA fee on top of the interest that you pay. 

And, this also explains why so many people are heavy into alternative forms of financing. Paying someone $5K up front plus the interest they charge takes good deals and makes them into bad deals. You are taking the price of every property and increasing the cost of it by $5,000 without adding a penny of value. 

I mean, let's leave it at this: you think those closing costs are great--which is your right. I think those closing costs--at least in a situation like this--is a fool's wager. 

What I have done is advised my relative to make copies of her financials and the note/property info and shop around for a (much) better deal. 

Mortgage Redecoration Fee in Lucas County: $28.00

Lender Fee: Same lender, and their fees are supposed to be taken out of the interest they charge. In any other industry this would be known as deceptive advertising because their advertising mortgage rate is part of a bait-and-switch. 

Title Attorney Fee: As title is not changing hands, this is not needed.

So, aside from the $28.00 fee paid to the county recorder, and the $15.00 paid to the runner to record it (assuming there is no discounting as yours is the only mortgage being recorded that day) we are back to the closing fees are paying $4,957.00 for the note holder to switch the interest rate and term to different numbers in their computer system.

I mean, seriously, how much time are we talking for the paperwork prep needed to do a refinance with the same lender? I am assuming they are computerized, and not using typewriters and mimeographs to produce the documents, so...  20 minutes? 

Further, if the refinance was included in the mortgage and the rate dropped enough to where the term or the payments dropped, thus dropping the overall costs, they that would make sense to do. However, with the $5K fee charged upfront, one must look at the payback period and add in the lost NPV that $5K has hidden inside (ala lost opportunity costs). Even a quick ballpark of the numbers they were giving her meant a payback period of almost a decade without the NPV factored in.

I told her not to do it.

It would make more sense to take that 5K "closing cost" and drop it into paying off the current note's principal. It would trim about $9K off of her total interest payments. 

I am starting to think that lotteries are not the only tax on people who can't do math--so are banks.

Got a question -- have a family member who is looking to purchase a rental from someone she knows, and is seeking to refinance her own home. Her lender is supplying terms for the rental property which... simply put I don't think any sane person would agree to. It takes a property which is under-priced by about 15% and converts it over to a negative cashflow nightmare for the next 12 years. I am telling them to avoid that deal like the plague, although I have no idea where to suggest alternative financing.

As for her own property, they are willing to refinance her at a slightly lower interest rate, and switch it over from 26 remaining years to 15 with lower monthly payments.  The savings are nice--the kicker is she must pay $5K of closing costs up front to refinance. Mind you, this is property she already owns, and is living in. They want $5K certified check up front to close on her house she is already living in.

I can't get past the point that her own lending institution is charging her $5K up front for closing when closing is nothing more than telling their computer system to drop her rate a smidgen. 

Am I being unreasonable, or are they?

Total noob question -- What is PIN?

REIA Toledo sounds good, but I am planning to hold off membership until I at least start dipping my toes in the water. I want to know I can make a go of this before I start investing in the annual fees.

Having said all of that, I can see why getting involved would be wise as soon as one actually started in the business... Groups of professionals are created because everyone benefits from being involved with other professionals. 

And, I appreciate the feedback. ALL of it goes into my "future to do" list :)

DC

 Many thanks for the info! I will grab that one. And, yes, I am listening to the podcasts. Tidbits in each and every one, plus it helps to absorb the feel of the business. 

A local! And, yes, I plan on starting smallish -- $40K range. Lower down payment, and less capital at risk per transaction. I did not know those would yield higher returns, but it makes sense. The more headaches there will be, the more return people will demand for putting up with the headaches. The pricier properties should either have a higher rate of return (to compensate for the higher capital at risk) or be safer overall. 

I do like your advice of focusing on a neighborhood/region. Seems like it would be easier to learn 1 region and get good at it--at least at first.

TY for the input!

 I will have to find them! Which one do you  recommend first?

Hi all!

I have finally decided to take the plunge and start doing. So, I am on here, uploaded a picture, and discovered I first joined on December 31, 2015...

Wow...

Too much wasted time.

So here I am, with my first post. Getting my feet wet. Books and magazines I am at least going to open and look at every page to my right, Amazon Prime music streaming my favorite play list over my Echo, and cats more or less subdued... which is strange because their feeding time in only 30 minutes away...

I am not proud to say this intimidates me. Not ashamed, as intimidation is Nature's way of saying, "Make sure the ice is six inches deep before you go running across the lake." Just not proud of how long it has taken me to begin to tentatively slide my feet across the pond.

Oh well. Enough self-checking on my self-checking. Time to glide a little.

Can anyone recommend any good Toledo groups? (Ohio, not Spain :) Or any good books on the numbers of investing in property? And, they can be technical. In fact technical is better. I have an MBA, and have helped prep 20-year budget and finance reports for companies. (TY professor Chichernea for one of the most intensely challenging Corporate Finance classes ever!)  I want to know that when I am crunching the financials I am not missing anything!

So, suggestions? Questions? Idle chit-chat?

I'd love to hear it all!

Best,

DC