How much should closing costs be?

S

scubasteve

Active member
I haven't really shopped around since I'm still 60 days from closing, but I'm looking at the GFE from KB mortgage/BAC and they estimated about 15K. They just said that they over estimated on a lot of things, but it still seems really high!

I'm only buying 0.25 points (on 650K) and I'll be paying property tax twice a year... does this sound right???
 
[quote author="scubasteve"]I haven't really shopped around since I'm still 60 days from closing, but I'm looking at the GFE from KB mortgage/BAC and they estimated about 15K. They just said that they over estimated on a lot of things, but it still seems really high!

I'm only buying 0.25 points (on 650K) and I'll be paying property tax twice a year... does this sound right???[/quote]
Could you please itemize their GFE? I'll compare your numbers to some of my buyers final HUD-1 closing statement. Excluding lender costs and impounds, your closing costs should be about .5-.75% of your purchase price for your price point.
 
The Escrow, Title, and other non-lender fees unfortunately are not negotiable for the most part. You can ask and hopefully get a bit off. If you can show a bona-fide cost quote from the same company (1st AM builder versus 1st AM resale home for example) then that can help your case.

Lender fees - underwriting, processing, credit report, tax service, flood certification, documents - should not top $1,000. The appraisal can add another $450 or so.

Rates today for a Jumbo Conforming mortgage run in the low 5's for -0- points (-0- origination/-0- discount points). Sub 5% rates do vary quite a bit so an exact quote for those terms is best obtained directly from a lender.

If you're going to jump ship due to costs, expect a sudden improvement in pricing from the in house lender. While this is consumer friendly, it's also a terrible way to do business because the first quote should always be your best quote. If your first quote could be bettered, now that there is competition, the first quote was a sham... proving the lender was more of a used car salesman rather than a mortgage professional.

If you find a legitimate quote from another company, I'd suggest letting the current lender give you their best and final offer. The same day as the other company for their best and final offer, then commit to closing with one or the other vendors. This has to be done no later than 30 days before COE. If you try this two weeks before closing, the in house lender knows you can't close in that time frame and will not budge on pricing... unless their first quote was their best to begin with... but I digress.

After you move (or stay) I can guarantee you'll hear of a better deal elsewhere. It's going to happen. Stick with your final choice. The better deal you hear about could be a phantom, not worth the time or effort to chase down. You have made a great choice in finance companies, your mortgage professional is taking good care of you, and you negotiated a market competitive price. Now, just enjoy the glide path towards closing and await the keys to your new home.

My .02c

Soylent Green Is People.
 
My lender seems to be doing a pretty good job. Great in prompt communication, not pushy, and full of information if I ask for it. He seems very patient.

He beat BofA's rates, and 4 other lenders I compared to (all referrals also). I should lock in my rate in the next few days. Approx 5% and a full point towards closing possibly.
 
I used Soylent Green is People for my financing (and USCTrojanCPA as my agent) and I must say they both did a kick a$$ job on my purchase.
 
Hey guys... thanks for the advice. I just got an update on my move-in date, which is either the 2nd or 3rd week of May, so I am still pretty over 60 days out of closing. The builder lender still says that they are overestimating a lot of stuff on the GFE, but I still get worried! They have been very good with calling me once a week to check up on me. Anyway, here is the break-down

Loan Amount: 540K (20% down)
Term: 30 yrs
Initial Rate: 5.125%

Origination charge: $6602 (Lender clarified that KB will be paying this)
Points for interest rate: $1,350 (0.250 pts)

Full Appraisal: $495
Credit Report Fee: $35
GFE Supplement: $260 (what the heck is this)

Title: $2832
Gov't Recording Fee: $150
Transfer Taxes: $742
Daily Interest Charges ($75.79/30 days): $2273
Homeowner's insurance: $756 (Do I prepay for the insurance or should it be a monthly charge?

Total: $15,495 (need to subtract Origination fee).
 
ScubaSteve, we had to pre-pay our home owners insurance for the entire year. Now we add a monthly amount to our escrow payment and the mortgage company will pay it in full next year on the renewal date.

Good luck with the close and your new house.
 
[quote author="scubasteve"]Hey guys... thanks for the advice. I just got an update on my move-in date, which is either the 2nd or 3rd week of May, so I am still pretty over 60 days out of closing. The builder lender still says that they are overestimating a lot of stuff on the GFE, but I still get worried! They have been very good with calling me once a week to check up on me. Anyway, here is the break-down

Loan Amount: 540K (20% down)
Term: 30 yrs
Initial Rate: 5.125%

Origination charge: $6602 (Lender clarified that KB will be paying this)
Points for interest rate: $1,350 (0.250 pts)

Full Appraisal: $495
Credit Report Fee: $35
GFE Supplement: $260 (what the heck is this)

Title: $2832
Gov't Recording Fee: $150
Transfer Taxes: $742
Daily Interest Charges ($75.79/30 days): $2273
Homeowner's insurance: $756 (Do I prepay for the insurance or should it be a monthly charge?

Total: $15,495 (need to subtract Origination fee).
[/quote]
Find another lender, KB's lender isn't giving you that good of a deal. If you shop around you might be able to find something at 5% near par or with a small rate buydown. Also, your title should run you about $600-$700 and escrow/recording/notary will be able $1,750-$2,000. Most likely you'll have to impound 3-4 months of property taxes, pay for your annual homeowner's insurance premium up front, impound of 3-4 months worth of insurance, pro-rated property tax ONLY ON THE LAND (you'll get a supplemental bill in the next fiscal year to pay for the building value), prepaid mortgage interest, and you'll pay for over a month's worth of HOA fees. SHOP AROUND WITH AT LEAST 3 LENDERS!!!
 
I already told KB that I was going to pay my property taxes twice a year so I'll need to ask them why it's in the GFE. I definitely agree that I could be gaining interest on that money. I'm very good when it comes to saving and paying all my bills on time.

Thanks for clearing all this up for me as I am total noob as this is my first time buying. I guess I'll start my search for a new lender when I get close to the 45 day mark (or should I be looking now?)
 
[quote author="jumpcut"]I can never understand why anyone would have an escrow account for taxes and insurance unless they have to. And, with 20% down, you shouldn't have to...unless you're the type of person who can't set money aside to pay your bills. Why give your bank an interest-free loan? They're not giving you the same courtesy.

Your property taxes & Mello are well over $10,000...you could be earning the interest on that money.

Plus, if they're late sending in your payment (it happens more often than you think), you're the one stuck with the interest and penalties. In the case of property taxes, that's a minimum of 10% if the payment is one day late.

I pay my insurance with a credit card so I can get the reward points, I always pay my card in full when the bill comes. But don't pay your tax with a credit card because they'll charge you a 2 1/2% fee.

Also, I agree with USCTrojan that those number look high. A lender should not be "over-estimating." This is his business, these are his fixed costs (other than the unlocked interest rate), and he should be able to give you what the document says: a GOOD FAITH estimate. You can bet that on the day of signing, when it's too late to change lenders, everything will have "somehow" come in on the high side.

As SGIP says, just my $.02[/quote]
We had to do an Escrow account for insurance and taxes or our interest on our mortgage payment would have been higher. I'm not sure if all banks do this, but ours did.

Also, the bank does give us interest on our Escrow account.
 
Check out Chase Mortgage.
We got 4.625% for a 30-year fixed conventional mortgage.
I'm trying to dig out our Closing Cost Statement too.
I believe our Closing Costs were a lot cheaper than the ones you've been quoted.
 
[quote author="bones"]@steve: Slightly off topic, but did you ever find a good home inspector? I'm a noob when it comes to this stuff too so it's been an informative thread. thanks to everyone for all the insight.[/quote]
IR2 and myself gave him a few good referrals.
 
[quote author="scubasteve"]Bones/Pebbles.. check ur PM![/quote]
Done. I'm glad you told me to check my PM, because I always forget to look there.
 
The Chase rate is either a sub $417k rate with costs, or a over $417k loan with giganto fees.

Concur on the shop around. Give everyone these terms:

Loan Amount
LTV
FICO
COE (30/45 days - one or the other)
Lender Only Fees
Rate

In the named case, here's how it should look:

Loan amount: $540,000
LTV: 80%
FICO: 740
COE: 30 days
Lender only fees: $6,602 + $1,350 Mama Mia! That's a speecy spicy meatball!
Rate: 5.125%

Yes, KB is "paying" the origination fee, but when you shop around the other lenders are also going to be "paying the origination fee" at that rate. Smoke and Mirrors. The builder isn't doing you a favor since pretty much everyone is at that price or better.

Note "Price", not "rate". You have to separate these two categories when comparing. You might find a 5.125% rate at a net price of $500 - a better deal than what KB is offering. Let the lender know which is more important to you: the lowest rate or the lowest price possible. Some buyers want a -0- fee loan over a 5.00% or so rate, so be clear when you talk to the lenders you contact in order to get a very clear comparable response.


My .02c
 
Do you need to provide all the personal financial info to 4 lenders (w2, tax returns), and the purchase contracts as well?

Thanks

ocguy said:
My lender seems to be doing a pretty good job. Great in prompt communication, not pushy, and full of information if I ask for it. He seems very patient.

He beat BofA's rates, and 4 other lenders I compared to (all referrals also). I should lock in my rate in the next few days. Approx 5% and a full point towards closing possibly.
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gld2 said:
Do you need to provide all the personal financial info to 4 lenders (w2, tax returns), and the purchase contracts as well?

Thanks

ocguy said:
My lender seems to be doing a pretty good job. Great in prompt communication, not pushy, and full of information if I ask for it. He seems very patient.

He beat BofA's rates, and 4 other lenders I compared to (all referrals also). I should lock in my rate in the next few days. Approx 5% and a full point towards closing possibly.
Click to expand...
Click to expand...
If you are a salaried individual then you'll have to provide W-2s, paystubs, and bank statements.  If you are self-employed or have rental properties or have other non W-2 income then you'll have to provide the lender the last two years of tax returns.  Loans are now truly fully underwritten from head to toe.
 
Any strings attached or any cost to get GFE?

ocguy said:
My lender seems to be doing a pretty good job. Great in prompt communication, not pushy, and full of information if I ask for it. He seems very patient.

He beat BofA's rates, and 4 other lenders I compared to (all referrals also). I should lock in my rate in the next few days. Approx 5% and a full point towards closing possibly.
Click to expand...
 
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