Closing costs for multi-family buildings as investment properties can be high. Investors need to make sure they have enough money to cover the down payment and closing costs before closing the deal. Using a title coverage calculator, investors can calculate your investment cost.
Also, it is important to determine how much cash you will need to cover closing costs before closing. This is because one of the conditions for approving a mortgage loan is to ensure that the buyer has sufficient funds to pay the down payment and the closing costs.
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Appraisal Fee: This fee is required by the bank in order to determine the LTV (loan-to-value) of the property. If the appraised value of $500,000 is less than 80% and the LTV is at least 80%, the bank will lend $400,000 from the total value. For insured mortgages, an appraisal fee is mandatory.
Inspection Fee: This fee covers the inspection of every unit within the building and all structural problems. An inspector should inspect the building. If he misses something, it could cost you a lot to fix. The inspector will charge more for each unit he inspects.
Legal fees & Title Search and Disbursements: Every transfer should be reviewed by a lawyer. A lawyer is responsible for completing the transfer of the deed and preparing the mortgage.
Land Survey Fee or Title Insurance Fee: The lender usually requires a recent survey of the property. Title insurance can be used to replace the non-existent survey.
The Mortgage Application and Processing Fees are based on whether the mortgage is insured. The mortgage investor must pay both the insurance company (CMHC/GE) as well as the lender if the mortgage is insured.