Suggestions On How To Reduce Closing Costs?
I would like to see if anyone has some creative ideas for reducing closing costs. In my case, I would like to pay more points to reduce my interest rate. However,I am limited to how many points I can pay because the points count as closing costs and the state puts a cap on what percentage of a loan the closing costs can make up. Supposedly the state is trying to protect individuals from brokers that charge excessive closing costs, but in my case they are actually costing me money in the long run. My broker did say that if the property has been surveyed in the last few years, the lender may waive the requirement for a new survey. Any other ideas?
What is you're goal? INcreased cash flow upfront, or quick payoff of the loan?
My goal is increased cash flow. I likely will pay the loan off early, but I have heard of too many investors that got into trouble because of inadequate cash flow. I want to make sure I can pay off the loan even if times get rough. Since I will almost certainly hold on to this particular property for 5 years, the points I pay should be recovered no matter how many I pay.
You can do a no points no closing costs loan but the interest rate will be about 1/2% to3/4% higher. Go for the longest term possible (30 years) or see if a lender offers an adjustable rate (which is lower than a fixed rate) for investor loan. As an example, a 5 year adjustable is amortized for 30 Years so you still have a lower monthly PITI.
One other thing. Try to close at the very end of the month, 29th or 30, because this will save you on interim interest which can be hundreds or thousands of dollars. In the case of a refinance you want to close on the 1st or 2nd becase most lenders will give what is called an "interest credit". You must specifically request the interest credit. This will save you 30 days of interim interest which can also run into hundreds or thousands of dollars depending the loan amount. When you do the interest credit your first payment will be do the first of the very next month.
im a mortgage broker.
most lenders (probably all) have limits to how far you can buy down the rate. that's the problem. your mortgage guy should know that.
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