Closing Cost & Interest Rate
- Thread starter wb
- Start date
usctrojancpa
Well-known member
That's crazy. I PMed you with a few lender contacts that my buyers used with good success.blitzjs said:
Irvine2Irvine
New member
blitzjs said:
Read into the details. A lot of times, they will put a really high number for Title insurance and home owners insurance. These will usually be lower and will be same regardless of lender. They put a high number to be conservative in giving you the estimate. Also, the 10K figure may include the interest prepayment , which really is not a part of the closing cost, but the money you need to bring to the close of escrow.
Irvine2Irvine said:
Yea, one of the quotes does include interest prepayment (she calls it interest per diem) and first years home owners insurance. I got a quote from State Farm for home owners and it was around 500 dollars annually, I wonder what they quoted me for.
I'll definitely ask for a breakdown, thanks.
total closings costs needed to be split into two buckets: (1) costs associated with obtaining the loan such as points, underwriting, processing, appraisal, escrow, lender's title, notary, recording, etc. (2) costs associated with homeownership such as interest per diem, first years homeowners insurance, amounts collected for an escrow/impound account, etc
when comparing total closing costs between lenders, you should look at the first category of costs as the second category should theoretically be the same. some lenders will low ball the second category of costs to make their total costs look more favorable and/or to mask higher costs from the first category.
another thing to keep in mind is that there are a few additional costs that do not normally fall into these categories in most resale purchase transaction but are typically added to the second category of costs. owners title and city/county transfer taxes are often paid by the seller in a resale purchase transaction. however most builders will require the buyer to cover these costs so that the total closing costs will be higher than a resale purchase transaction.
when comparing total closing costs between lenders, you should look at the first category of costs as the second category should theoretically be the same. some lenders will low ball the second category of costs to make their total costs look more favorable and/or to mask higher costs from the first category.
another thing to keep in mind is that there are a few additional costs that do not normally fall into these categories in most resale purchase transaction but are typically added to the second category of costs. owners title and city/county transfer taxes are often paid by the seller in a resale purchase transaction. however most builders will require the buyer to cover these costs so that the total closing costs will be higher than a resale purchase transaction.
sgip
Well-known member
T2 and MyIrvine have it exactly right. A big bank might quote $9k in costs, but your terms need to be spelled out when you compare. Perhaps some of that $9k are costs you'd pay no matter if you refinance or not - interest, insurance, and taxes - for example.
Quotes today aren't worth the paper they're printed on. For example, I can offer a 3.875% rate for zero points. Did I mention you have to have 30% equity, pay a $8,000 origination fee (not "points"). You can't lock it until the application has full underwriting approval. By the way, is the property a Condo? Sorry, that's not going to get you the rate that was quoted. Jeeze, what have you been doing with your 2106 expenses? We can't use your $6,500 per month salary what with a $450 lease payment and $500 in expenses written off. Besides, it's going to take 90 days to get your approval anyway. Who knows what rates will be then. These are some of the hurdles people run into once the quote they've gotten is examined thoroughly by the funding lender.
There are many hoops to jump through today to close a loan. These hoops aren't often forward strategized around, but often discovered in the rear view mirror once you're starting the refi process. Closing is job 1, not simply obtaining the mythical "best rate and fees" from a company that's more of a quote machine than a professional mortgage shop. There is a difference.
My suggestion: 1) get a good lender referral based on experience, not rate. 2) get a quote from that lender. 3) If you're within .125% in rate and about $500 in fees from the next guy, stay with the referral source. They provided a market competitive quote and because the referral came based on the closing experience of the person who sent you to them, you know you'll be well taken care of.
My .02c
Soylent Green Is People.
Quotes today aren't worth the paper they're printed on. For example, I can offer a 3.875% rate for zero points. Did I mention you have to have 30% equity, pay a $8,000 origination fee (not "points"). You can't lock it until the application has full underwriting approval. By the way, is the property a Condo? Sorry, that's not going to get you the rate that was quoted. Jeeze, what have you been doing with your 2106 expenses? We can't use your $6,500 per month salary what with a $450 lease payment and $500 in expenses written off. Besides, it's going to take 90 days to get your approval anyway. Who knows what rates will be then. These are some of the hurdles people run into once the quote they've gotten is examined thoroughly by the funding lender.
There are many hoops to jump through today to close a loan. These hoops aren't often forward strategized around, but often discovered in the rear view mirror once you're starting the refi process. Closing is job 1, not simply obtaining the mythical "best rate and fees" from a company that's more of a quote machine than a professional mortgage shop. There is a difference.
My suggestion: 1) get a good lender referral based on experience, not rate. 2) get a quote from that lender. 3) If you're within .125% in rate and about $500 in fees from the next guy, stay with the referral source. They provided a market competitive quote and because the referral came based on the closing experience of the person who sent you to them, you know you'll be well taken care of.
My .02c
Soylent Green Is People.
usctrojancpa
Well-known member
Buyers should get quotes from at least 2-3 lenders. If all the lenders are being competitive, the rates will be with about a 1/8% like SPIG mentioned. If the rate sounds too good to be true, it probably is. Be sure to get all of the lender costs (origination fee, underwriting fee, funding fee, etc) and compare those with each other. Don't worry about the title, escrow, and recording fees as those are 3rd party fees that the lender is not in control of and will basically be the same with whatever lender you go with. Also, always ask for a Good Faith Estimate from your lender and verify that you have locked when you lock your rate.
usctrojancpa
Well-known member
PM senthidden said:
irvinerealtor
Well-known member
And for what it's worth, in transactions that I've worked with SGIP, all experiences have been very positive, even with some difficult borrower circumstances. Highly recommend.
-IR2
P.S. In the interest of full disclosure, I do not (nor have I ever) receive or seek $$$ from any of the lender or contractor referrals I make.
-IR2
P.S. In the interest of full disclosure, I do not (nor have I ever) receive or seek $$$ from any of the lender or contractor referrals I make.
irvinehomeowner
Well-known member
Yeah... I think SGIP is probably one of the best people to refer to. He provides tons of information not only here but in PMs/email without any requirement to use him for your financing.
He actually wants you to comparison shop him around, even if it means getting a better deal elsewhere. If he was a seller on eBay... A+++++++++, hehe.
He actually wants you to comparison shop him around, even if it means getting a better deal elsewhere. If he was a seller on eBay... A+++++++++, hehe.
octrends
New member
sgip said:
Defn. it true, some lenders just to get the business will show the lowest possible rate, but at the time of closing or 1 week prior to closing they may raise Q about ur income or some documentation and will tell u they cannot give the quoted rate. But can offer a little higher rate, now u r stuck since u r close to ur closing date. defn. it's recommended to go with referred lender, atleast u know upfront what r u getting into?
I left out all the little charges ( < $100, like credit reports and such)
Origination fee = 990
Appraisal = 595
Title Ins-Lender Coverage = 437
Title Ins-Owners Coverage = 1020
Closing/Escrow/Settlement = 1456
Endorsement to Title = 125
City/Cnty Tax / Stamp-Deed = 858
HoA Transfer Fee = 550
Approximate Cost of Closing = 6495
Prepaid Interest = 1333.44
1st Year Home Owners Insurance = 1220
Approximate Cost of Prepaid Interest and Escrows = 2553.44
Approximate Total = 9048.44
Origination fee = 990
Appraisal = 595
Title Ins-Lender Coverage = 437
Title Ins-Owners Coverage = 1020
Closing/Escrow/Settlement = 1456
Endorsement to Title = 125
City/Cnty Tax / Stamp-Deed = 858
HoA Transfer Fee = 550
Approximate Cost of Closing = 6495
Prepaid Interest = 1333.44
1st Year Home Owners Insurance = 1220
Approximate Cost of Prepaid Interest and Escrows = 2553.44
Approximate Total = 9048.44