Fix and Flip Loan Closing Costs Explained

Origination fees, expressed as 'points,' are the lender's primary compensation for underwriting and funding your loan. LYNK Mortgage and similar hard money lenders typically charge 1–3 points, with 2 points being common for fix-and-flip deals. One point equals 1% of the loan amount; on a $200,000 loan, 2 points cost $4,000. Origination fees cover the lender's underwriting, appraisal ordering, title work, compliance review, and funding coordination. These fees are non-negotiable with most lenders but vary by lender, loan amount, and your experience level. Larger loans often have lower per-point fees; experienced investors may negotiate better rates. Most hard money lenders roll origination fees into the loan amount, meaning you don't pay them upfront in cash but they're added to your loan balance. This increases your total debt and interest costs but is typical in hard money deals where cash is tight. Calculate total cost impact: a 2-point fee on $200K costs $4,000, compounded by interest over 12 months—total interest cost varies but adds significantly to your all-in rate.

Appraisals cost $400–$800 and assess the current property value and your projected ARV. LYNK Mortgage orders the appraisal during underwriting; the cost is typically charged to you via closing costs or deducted from loan proceeds. Title search and title insurance ($800–$1,500) verify ownership, search for liens, and insure the lender against title defects. A title company coordinates closing, prepares documents, collects signatures, and holds funds in escrow until all conditions are met. Escrow costs are typically $300–$600 and are included in title company fees. Lender's title insurance (different from owner's title insurance, which you don't need for flips) protects LYNK Mortgage's interest and is required. These costs are industry-standard; shopping between title companies may save $100–$300 but not dramatically. Many lenders have preferred title companies and may require using them, limiting negotiation. Plan for title and escrow as a bundle cost of $1,000–$2,500 per closing.

Beyond appraisal and title, closing involves miscellaneous fees: credit report ($25–$75), property survey ($300–$600 if required), environmental assessment ($200–$500 if needed), recording fees ($100–$300), insurance binder ($0 if paid separately), and attorney review if required ($300–$500). Some lenders charge processing fees ($200–$500), loan documentation fees ($100–$250), and notary fees ($50–$100). These accumulate; total miscellaneous costs typically range $1,000–$2,000 depending on property complexity and lender requirements. Unusual properties (commercial, mixed-use, environmental concerns) trigger additional assessments and fees. Straightforward single-family flips have minimal miscellaneous costs. Ask LYNK Mortgage for a complete closing cost estimate before committing, ensuring no surprises. Some costs can be negotiated or reduced; others are fixed by third parties and non-negotiable. Get a Good Faith Estimate (federal requirement) detailing all costs before closing.

Total closing costs for a typical fix-and-flip loan range 3–6% of the loan amount. A $200,000 loan has closing costs of $6,000–$12,000. Most hard money lenders roll these into your loan balance, making them financed rather than paid upfront. While convenient, this increases your total debt and interest expense. Factor closing costs into your LTC calculation: if you're acquiring for $150,000, rehabbing for $100,000, and closing costs are $7,000, your actual project cost is $257,000. Your LTC is $257,000 / ARV. LYNK Mortgage's 95% LTC limit applies to total project cost including closing, so accurate closing cost estimates are critical. Some investors negotiate points or fees during underwriting, particularly on larger loans or if they have strong track records. However, most lenders have fixed fee schedules, leaving limited room for negotiation. Plan conservatively for closing costs and avoid being surprised; closing cost overruns reduce your borrowing capacity and profitability.