<br>

*This writeup was provided by an OfferMarket homeowner selling their [turnkey rental property](https://www.offermarket.us/real-estate-glossary/turnkey-rental-properties) at [5655 Harbor Valley Dr, Brooklyn Park, MD 21225](https://www.offermarket.us/listings/5655-Harbor-Valley-Dr-Brooklyn-Park-MD-21225-USA)*

<br>

## Buy On The Path To Progress

<br>

Sounds catchy, but what does it mean? To buy on the path to progress... 

<br>

The greatest hockey player, Wayne Gretzky famously said:

<br>

## *I skate to where the puck is going, not where it has been.*

<br>

The best deals are where large investment, population trends and home sales trends are signaling that an area will likely be significantly more attractive in the near future than the present. If you strategically buy real estate where economic development is happening, you will de-risk your investment and likely end up with above average returns from both a cash flow and appreciation perspective.

<br>

This concept is similar to Warren Buffett's contrarian value investing philosophy which was covered by our sister site: [Real Estate Blogs](https://realestateblogs.us/2020/10/03/warren-buffett-real-estate-contrarianism/)

<br>

Speaking of Warren Buffett, his value investing philosophy is perfectly aligned with our view of correct way to treat real estate investments. Focus on [locking in value at entry (buying at an attractive price)](https://www.offermarket.us/frequently-asked-questions/when-is-the-best-time-to-buy-a-house) and long term horizon (never sell mentality) is paramount in getting successful outcomes. 

<br>

## Brooklyn Park, MD: Smack Dab In The Middle Of The Path To Progress

<br>

This property in Brooklyn Park is less than 10 minutes away from Port Covington and all of the future development that is going to take place there. It’s supposed to be something like TomorrowLand, or Harbor East on steroids. Also, the trip from Brooklyn Park might get shorter after they complete the planned bridge from Brooklyn to Port Covington. Sources: [Port Covington Tomorrow](https://pc.city/development/#under-development), [Goldman Sachs Urban Investment Group, TIF Funding](https://www.southbmore.com/2020/06/22/port-covington-development-approved-for-148-million-in-tif-bonds-construction-to-resume-this-fall/)

<br>

Giant property developer, Bozzuto, recently developed and now manages [Woodfall Greens](https://www.woodfallgreens.com/), Brooklyn Park’s first ever luxury apartment complex. It was completed in 2018, with 230 luxury units. It is less than a mile from the subject property at Harbor Valley Dr.

<br>

Ryan Homes, the largest homebuilder in the Mid-Atlantic, is currently developing a luxury townhome community in Brooklyn Park, [Cedar Hill Townhomes](https://www.ryanhomes.com/new-homes/communities/10222120151368/maryland/brooklyn-park/cedar-hill-townhomes), again just a few minutes away from the subject property. This Ryan Homes development is expected to be over 100 townhomes with prices starting in the $300s.

<br>

The city of Baltimore is planning for a complete renovation of the waterfront along Cherry Hill and Brooklyn (as well as Westport and Port Covington). They’re going to turn these waterfront areas into parks, walking trails, bike paths, and green space. The plan includes a new bridge to connect Brooklyn to Port Covington. This development plan also includes turning the Hanover Street Bridge into a pedestrian/bike path, with parks and green space on either side. Sources: [Middle Branch Waterfront Master Plan](https://www.southbmore.com/2020/06/09/middle-branch-waterfront-master-plan-aims-to-turn-hanover-street-bridge-into-a-park/)

<br>

Northeast Maglev is planning to build a high-speed train line between D.C. and Baltimore, with the Baltimore station being developed and located in Cherry Hill—the proposed location for the station is just 3.5 miles, or an 8 minute drive from the property at Harbor Valley. [15 Minutes from Baltimore to Washington DC on Northeast Maglev - South Bmore](https://www.southbmore.com/2020/08/04/high-speed-maglev-train-hopes-to-build-baltimore-station-in-cherry-hill/)

<br>

Some local non-profits have teamed up to create a bike path and pedestrian foot trail connecting the BWI trail in Linthicum Heights to the Gwynn Falls Trail in Cherry Hill. This trail will link the Baltimore & Annapolis Trail and the BWI Trail to the South, with the Gwynn Falls Trail to the North, that goes up to Baltimore City. This trail will pass right through Brooklyn Park, and within 200 yards of the property at Harbor Valley Dr. [Middle Branch waterfront in South Baltimore is getting face-lift - Baltimore Sun](https://www.baltimoresun.com/maryland/baltimore-city/bs-md-middle-branch-20190531-story.html)

<br>

JP Morgan Chase just opened the very first banking center in Cherry Hill—ever!
[First bank in Baltimore's Cherry Hill neighborhood to open - WBALTV](https://www.wbaltv.com/article/first-bank-baltimore-cherry-hill-jp-morgan-chase/30569948)

<br>

Baltimore City Recreation and Parks announced in September 2020 the construction of the Middle Branch Fitness and Wellness Center at Cherry Hill and its adjacent multi-purpose, state-of-the-art playing field at Reedbird Park slated to open in 2022. [Baltimore Rec & Parks announces Cherry Hill Reedbird Park to become 'Super' Rec Center - Fox Baltimore](https://foxbaltimore.com/news/local/baltimore-rec-parks-announces-cherry-hills-reedbird-park-to-become-super-rec-center)

<br>

### Full deal overview: [6% Cap Rate Turnkey Rental Property at 5655 Harbor Valley Dr, Brooklyn Park, MD 21225](https://www.offermarket.us/listings/5655-Harbor-Valley-Dr-Brooklyn-Park-MD-21225-USA)

<br>

Learn how investing along the path of progress in Brooklyn Park, MD, Anne Arundel County can yield great returns in real estate investment.

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Buy On The Path To Progress: Brooklyn Park, MD - OfferMarket

Buy On The Path To Progress: Brooklyn Park, MD


<br>

**Last Updated:** October 23, 2022

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<br>

## DSCR Loan Interest Rate Index

<br>

In our effort to be the most competitive and transparent private lender, we publish our [DSCR Loan Interest Rate Index](https://www.offermarket.us/blog/dscr-loan-interest-rate-index) which tracks the prevailing interest rates for competitive DSCR loans.

<br>

<div style="width:100%;">
<iframe width="100%" height="371" seamless frameborder="0" scrolling="yes" src="https://docs.google.com/spreadsheets/d/e/2PACX-1vRJPw1fYWqj_5mdlNBrD5MLne_ApqpOXlNmkmNE_sZfPgsbn9pU0mWUenEO1x6WE9237S7jzaQE2Hig/pubchart?oid=262687025&amp;format=interactive"></iframe>
</div>

<br>

***Note:** based on 30 year fixed rate, 75% LTV, 1.2 DSCR, 720 credit score. Conventional 30 year fixed rate mortgage courtesy of CNBC. DSCR loan interest rates and spreads are based on best available nationwide private lender data for competitive rates. OfferMarket Capital LLC DSCR loan interest rates track DSCR Low and are typically more competitive than peers.*

<br>

## Spread between DSCR Loans and Conventional 30 Year Fixed Rate Mortgage

<br>

As you can see from the chart above, DSCR loan interest rates nearly doubled from 4% in Q4 2021 to 7.5% in Q2 2022 and again in Q3 2022. The spread between DSCR loans and the 30 year conventional fixed rate mortgage nearly doubled from 0.85% to 1.5%. This means that the fixed income investors that buy DSCR loans, primarily through securitizations, demand a higher premium (spread) during times of market uncertainty.

<br>

Let's take a closer look at how the market works to understand why DSCR loan interest rates can be volatile.

<br>

## Market For Securitized DSCR Loans

<br>

There is a multi-billion dollar market for securitized DSCR loans, also known as non-QM or non qualified mortgages -- mortgage backed securities composed of hundreds or thousands of DSCR loans for rental properties. This product is most commonly purchased by institutional asset managers such as insurance companies, mortgage REITs and pension funds that are looking for fixed income at an attractive yield compared to conventional mortgage backed securities and US Treasury bonds.

<br>

## Positive Feedback Loop: DSCR Loan and Non-QM Securitization

<br>

During times of interest rate volatility and economic uncertainty, the institutions that buy DSCR mortgage backed securities do two things:

<br>

1. they pause or slow their purchasing of this asset class
2. they demand a higher premium compared to lower risk alternatives such as the 30 year conventional fixed rate mortgage 

<br>

When interest rates rise, the value of loans at lower interest rates declines. This leaves private lenders and non-QM lenders that originate these loans in a difficult situation:

<br>

- if the investment banks and firms that securitize these loans and sell them to institutions stop buying, they are forced to hold these loans on their books which means they have less capital to originate new loans
- if the securitization firms are buying loans, private lenders are forced to sell at a loss because their newly originated loans are at significantly lower interest rates than the current interest rate

<br>

While this is happening, overall demand for loans from rental property investors is declining rapidly because of the spike in interest rates. This forces private lenders and non-QM originators to layoff staff and raise fees to avoid further losses. Everything we just covered explains why interest rates for DSCR loans spiked. While the conventional 30 year fixed rate mortgage was spiking, grabbing headlines, the DSCR loan was rising in a more pronounced manner.

<br>

## Locking In Your DSCR Loan Interest Rate

<br>

Now, you may be thinking, isn't my interest rate locked in? Unlike the conventional mortgage market (Fannie, Freddie), interest rate locks are not common for DSCR loans. In calm markets, minor movements are absorbed by the private lender and securitization firm. But in turbulent markets, interest rate spikes need to be revised and accepted by the borrower.

<br>

Volatile markets such as this are extremely disruptive to what is normally an orderly, functioning marketplace between originators, securitization firms and institutional consumers of credit. At times the market has been definitively dysfunctional, with borrowers experiencing significant delays and frustrations. This is a major reason why we published this article, because we believe in transparency and educating our borrowers.

<br>

## Refinancing Out of Cash or Bridge Loan

<br>

There are many real estate investors who use the BRRR strategy and now find themselves in a situation where they are either in a high interest rate bridge loan ("fix and flip" or "hard money") or their cash is tied up in one or more deals. They need to refinance into lower interest rate or pull their cash out of their deals but DSCR rental loan interest rates are significantly higher than what they were expecting. 

<br>

We can be talking a $250 - $750 per month hit to free cash flow depending on loan amount when you move from 4% to 7.5%. That takes the deal from positive free cash flow to breakeven or negative free cash flow. This is a difficult and painful situation to be in financially.

<br>

## Solution for Private Lenders: Setting Better Expectations

<br>

Setting clear expectations is absolutely critical. Being transparent with your borrowers regarding how you operate and is absolutely critical. Educate your borrowers -- borrowers deserve to be informed and to understand the inner-workings of the DSCR Loan market. Their real estate investing business relies on it.

<br>

## OfferMarket Capital: Your Hard Money Private Lender

<br>

- [Get a quote in under a minute: DSCR Loans, Bridge Loans](https://www.offermarket.us/loans)
- [OfferMarket Capital: Private Lender Program Guidelines](https://www.offermarket.us/capital)
- [Private Lender Guide](https://www.offermarket.us/blog/real-estate-private-lenders)
- [Bridge Loan Index](https://www.offermarket.us/blog/bridge-loan-interest-rate-index)

<br>

The market for DSCR Loans is experiencing significant turbulence. Interest rates for DSCR loans have spiked 2% in the past 2 months. Here's what's happening, how this affects borrowers, and the DSCR Loan Index to provide more transparency.

What's going on with interest rates for  DSCR Loans?

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What's going on with interest rates for  DSCR Loans? | OfferMarket

What's going on with interest rates for DSCR Loans?

<br>

Facebook Groups are an incredibly important source for off-market listings. If you are in the market for a primary residence or investment property, and you want to [avoid the panic buying in the current housing market](https://www.offermarket.us/guides/how-to-avoid-panic-buying-in-the-current-housing-market), then you will want to take a closer look at Facebook Groups.

<br>

There are Facebook Groups for just about everything, so it should come as no surprise that there are Facebook Groups for real estate. Most Facebook Groups for real estate are regional (i.e. State-specific) or local (i.e. City or County-specific). Facebook Groups are strictly for [wholesale real estate](https://www.offermarket.us/guides/wholesale-real-estate-101) listings while others are strictly for [For Sale By Owner](https://www.offermarket.us/real-estate-glossary/fsbo) listings.

<br>

There's a [world of off-market real estate most homebuyers do not know about](https://dwshorowitz-offermarket.medium.com/wholesale-real-estate-the-world-of-real-estate-you-probably-know-nothing-about-but-you-should-b544c6ad69b5), and Facebook Groups are a great place to access it.

<br>

## Join the [Real Estate Marketplace: Wholesale, For Sale By Owner](https://www.facebook.com/groups/326051528838367) Facebook Group

<br>

The easiest way to find relevant Facebook Groups for real estate is to search on Facebook for your local market using the following terms:

<br>

- "investors network"
- "real estate"
- "wholesale real estate"
- "turnkey properties"

<br>

## Subscribe to OfferMarket deal flow:

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<br>

Facebook Groups are great for finding off-market listings and wholesale real estate. Discover how to buy and sell in this guide.

Facebook Real Estate Marketplace OfferMarket

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Facebook Real Estate Groups: Wholesale, FSBO - OfferMarket

Facebook Groups For Real Estate: Wholesale, For Sale By Owner

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket provides DSCR rental loans, bridge loans, hard money, fix and flip, slow flip, and ground up construction loans.

Private Lending | OfferMarket

Private Lending

Understanding Closing Costs

Calculating Your Closing Costs

Reducing Your Closing Costs

Conclusion

Frequently Asked Questions

Grow your real estate portfolio with OfferMarket

**Last updated:** March 31, 2025

Buying a home is exciting but understanding closing costs can feel overwhelming. These fees can add up quickly, impacting your budget and overall financial plans.

Knowing how to [calculate closing costs](https://www.offermarket.us/blog/closing-cost-calculator) can empower you to make informed decisions. From lender fees to title insurance, each expense plays a role in the final amount you’ll pay. By breaking down these costs, you can better prepare for your home purchase and avoid unexpected surprises.

This knowledge not only helps you negotiate better but also ensures you’re financially ready for one of life’s biggest investments. Let’s dive into the key components of closing costs and how you can estimate them accurately.

## **Understanding Closing Costs**

Closing costs encompass various fees and expenses required to finalize your home purchase. Grasping these costs ensures you’re financially prepared and can avoid unexpected expenses.

<br>

[![Need a DSCR loan, instant quote, takes 1 minute, no credit pull, no obligation](https://cms.offermarket.us/uploads/CTA_8c5a9145c5.jpg)](https://www.offermarket.us/dscr-loan?ref=tjdscrcontent)

<br>

### **What Are Closing Costs?**

Closing costs include all fees beyond the [home’s purchase](https://www.offermarket.us/blog/how-to-buy-a-house) price necessary to complete the transaction. They cover lender fees, title insurance, and other essential services. Typically, these costs range from 2% to 5% of the home’s price for buyers. For example, on a $400,000 home, you might pay between $8,000 and $20,000 in closing costs.

### **Common Types of Closing Costs**

Closing costs consist of several components, each serving a specific purpose in the home-buying process:

1. Loan-Related Fees  
**Loan Origination Fee:** Charges for processing your loan application.  
**Appraisal Fee:** Cost of evaluating the home’s market value.  
**Credit Report Fee:** Expense for obtaining your credit history.  

2. Title and Legal Fees  
**Title Insurance:** Protects against potential issues with property ownership.  
**Attorney Fees:** Costs for legal assistance during the transaction.  
**Escrow Fees:** Charges for managing the escrow account. 
 
3. Government Fees  
**Recording Fees:** Costs to register the property transfer with local authorities.  
**Transfer Taxes:** Taxes imposed by the state or locality on the property sale.  

4. Prepaid Expenses  
**Homeowner’s Insurance:** Premiums paid upfront for insurance coverage.  
**Property Taxes:** Prepaid taxes based on the home’s assessed value.  
**Interest Payments:** Initial interest on your mortgage until the first payment is due.  

5. Inspection Fees  
**Home Inspection:** Cost of assessing the home’s condition.  
**Pest Inspection:** Fees for checking the property for termites and other pests.  
**Survey Fee:** Cost of verifying property boundaries.  
**Courier Fees:** Charges for delivering documents securely.

Understanding each type of closing cost helps you anticipate expenses and negotiate effectively during your home purchase.

## **Calculating Your Closing Costs**

Estimating your [closing costs](https://www.offermarket.us/blog/cc) ensures you're financially prepared for your home purchase. Understanding the variables involved helps you budget accurately.

### **Key Factors to Consider**

Several elements influence your closing costs:

* **Loan Type**: [FHA](https://www.offermarket.us/blog/loans-in-real-estate#:~:text=predictable%20monthly%20payments.-,FHA%20Loans,-FHA%20loans%2C%20backed), VA, and conventional loans have distinct fee structures.  
* **Home Price**: Higher-priced homes generally incur higher closing costs.  
* **Location**: State and county taxes, as well as recording fees, vary regionally.  
* **Service Providers**: Fees for appraisers, inspectors, and other third-party services differ by provider.  
* **Discount Points**: Paying points can lower your interest rate but increase upfront costs.  
* **Credit Score**: Better scores may reduce certain fees and insurance premiums.

### **Tools and Resources for Calculation**

Utilize these resources to accurately calculate your closing costs:

* **Online Calculators**: Websites like Bankrate and Zillow offer closing cost calculators tailored to your loan type and location.  
* **Lender Estimates**: Request a Loan Estimate from your lender, detailing all anticipated closing costs.  
* **Real Estate Agents**: Experienced agents provide insights and estimates based on recent transactions in your area.  
* **Title Companies**: Consult with title companies for precise costs related to title insurance and escrow fees.  
* **Government Resources**: Access state-specific fee schedules through local government websites to understand mandatory charges.

By considering these factors and utilizing available tools, you can accurately calculate your closing costs and navigate the home-buying process with confidence.

## **Reducing Your Closing Costs**

Lower your closing costs by implementing effective strategies and making informed choices during the home-buying process.

### **Negotiation Strategies**

You can reduce closing costs by negotiating with various parties involved in the transaction. Start by discussing lender fees; some lenders may waive or lower origination fees. Compare quotes from multiple lenders to find competitive rates. Additionally, negotiate with sellers to cover a portion of your closing costs through seller concessions. Shop around for third-party services like title insurance, inspections, and appraisal fees to secure the best prices. Leveraging these negotiation tactics can significantly decrease your out-of-pocket expenses.

### **Choosing the Right Lender**

Selecting the [right lender](https://www.offermarket.us/blog/private-lender) plays a crucial role in minimizing your closing costs. Compare loan estimates from different lenders to identify the one offering the lowest fees and best terms. Look for lenders that provide competitive interest rates and lower origination fees. Consider lenders that offer discounts for paying points or bundling services, which can reduce overall costs. Additionally, choose a lender with positive reviews and a reputation for transparency to ensure there are no hidden fees. By carefully selecting a lender, you can ensure lower closing costs and better financial terms for your mortgage.

## **Conclusion**

Being proactive about closing costs sets you up for a smoother home-buying journey. By taking the time to calculate and understand these expenses you gain control over your finances and make smarter decisions. Leveraging the strategies discussed can help you minimize costs and keep more money in your pocket. Stay informed and prepared to confidently move forward with your home purchase knowing you've covered all the bases.

## **Frequently Asked Questions**

### **What are closing costs when buying a home?**

Closing costs are fees and expenses required to finalize a home purchase. They typically range from 2% to 5% of the home's purchase price and include lender fees, title insurance, attorney fees, government fees, prepaid expenses like homeowner’s insurance and property taxes, and inspection fees. These costs are in addition to the down payment and are essential for completing the transaction.

### **Why is it important to understand closing costs?**

Understanding closing costs is crucial because they can significantly impact your overall budget when buying a home. Being aware of these expenses helps you prepare financially, avoid unexpected surprises, and make informed decisions. Additionally, knowing the breakdown of closing costs allows you to negotiate better terms and potentially reduce the total amount you need to pay out of pocket.

### **What components make up closing costs?**

Closing costs are made up of several components, including loan-related fees (such as origination and appraisal fees), title and legal fees (like title insurance and attorney fees), government fees (recording fees and transfer taxes), prepaid expenses (homeowner’s insurance and property taxes), and inspection fees (home and pest inspections). Each of these plays a role in finalizing the home purchase process.

### **How much do closing costs typically range?**

Closing costs typically range from 2% to 5% of the home’s purchase price. The exact amount depends on various factors, including the loan type, home price, regional location, and specific fees charged by service providers. For example, on a $300,000 home, closing costs could range from $6,000 to $15,000.

### **How can I calculate my closing costs?**

You can calculate your closing costs by considering factors like the type of loan, home price, and regional fees. Use online calculators, obtain estimates from your lender, consult with real estate agents and title companies, and refer to government resources. These tools and resources provide detailed breakdowns to help you estimate the total amount you’ll need to cover.

### **What factors influence the amount of closing costs?**

Several factors influence closing costs, including the type of loan (FHA, VA, conventional), the home's price, regional location, fees charged by service providers, discount points, and the buyer's credit score. Each of these elements can affect the overall cost, making it important to consider them when budgeting for your home purchase.

### **What tools can help me estimate closing costs?**

Tools that can help estimate closing costs include online closing cost calculators, lender-provided estimates, insights from real estate agents, consultations with title companies, and government resources. These tools offer detailed breakdowns and projections, enabling you to get a clear picture of the expenses involved in your home purchase.

### **How can I reduce my closing costs?**

You can reduce your closing costs by negotiating with lenders to lower or waive certain fees, comparing quotes from multiple lenders to find the best rates, and discussing seller concessions to cover part of the closing costs. Additionally, selecting the right lender and being informed about the various fees can help you identify opportunities to decrease your out-of-pocket expenses.

### **Can I negotiate closing costs with my lender?**

Yes, you can negotiate closing costs with your lender. Lenders may be willing to reduce or waive certain fees, especially if you have a strong credit score or are a repeat customer. It’s important to discuss all potential fees upfront and explore options to lower them during the negotiation process to minimize your overall closing costs.

### **What role does selecting the right lender play in closing costs?**

Selecting the right lender is crucial in managing your closing costs. Different lenders may offer varying fee structures, interest rates, and loan terms. By comparing loan estimates from multiple lenders, you can identify the best terms and lowest fees, helping to reduce your overall closing costs and secure a more favorable financial arrangement for your mortgage.

---

## Grow your real estate portfolio with OfferMarket

OfferMarket is a real estate investing platform. Month-in-month-out, thousands of real estate professionals leverage our platform to grow and optimize their business. Our mission is to help you build wealth through real estate and we offer the following benefits to our members:

💰 **[Private lending](https://www.offermarket.us/loans?ref=content-land-payment-calculator)**</br>
☂️ **[Insurance rate shopping](https://www.offermarket.us/insurance?ref=content-land-payment-calculator)**</br>
🏚️ **[Off market properties](https://www.offermarket.us/listings?ref=content-land-payment-calculator)**</br>
💡 **[Market insights](https://www.youtube.com/channel/UCRoNHXFVgI36SV0QQpyf9fw)**</br>

---
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---


Discover how to calculate closing costs when buying a home. Learn key factors, tools, and strategies to estimate and manage these essential expenses.

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How Can I Calculate Closing Costs: A Comprehensive Guide to Closing Costs

Understanding Closing Costs

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