Real Estate Investor · Palm Bay, FL · Member since 2010 · 12 posts · 1 vote
I am buying my first home which is a duplex in Short Sell for 72,000 dollars I am putting down the 3.5% for the FHA requirments....I am going to live in one side and rent the other side which will almost cover the complete morgage, it all sounds great but now I am faced with the closing cost which is estimated to be around 7000 dollars.
I thought this was a little high on a loan for 69000 after my 3.5% down...does this amount for closing sound average or is it a little high? Any suggestions will be great.
...but now I am faced with the closing cost which is estimated to be around 7000 dollars.
Looking at your list of costs above, it appears that less than half of the $7K is closing costs. The rest are escrow and pre-paid insurance costs.
Of the half that are closing costs, legally you should have received a Good Faith Estimate (GFE) of every one of these costs when you submitted your loan application and the contract on the property. In fact, recent changes to the law now ensure that the GFE you received is very, very close to the fees you ultimately pay. So, this information shouldn't have been too much of a surprise.
Even so, some of the fees seem very high. It appears you're paying nearly 2 points to the broker/lender, and the escrow company/attorney is charging $750, which is crazy.
Next time, shop around and read the GFE before you move forward with your broker/lender...
Is the $7000 in addition to your down payment? If so, you're getting ripped off (unless there is something legitimate going on that you aren't aware of). How is it broken down on your GFE that you should have gotten when you applied for your loan? What is going to the broker and have you bought down the rate?
Even If the $7000 includes your down payment (of about $2500) it's still pretty high.
What are you considering as "closing costs"? Often times lump all settlement fees and prorations into what they call "closing costs".
If you're going FHA and the property was not owner occupied (likely not since it's a duplex), the property tax escrow will consume a lot of the money you need to bring to the table. Plus, there will be an escrow for you insurance. On taxes and insurance, the escrows are usually one year.
Without seeing your HUD (settlement statement) it's really hard to judge whether or not you're being "ripped off".
Is the $7000 in addition to your down payment? If so, you're getting ripped off (unless there is something legitimate going on that you aren't aware of). How is it broken down on your GFE that you should have gotten when you applied for your loan? What is going to the broker and have you bought down the rate?
Even If the $7000 includes your down payment (of about $2500) it's still pretty high.
Thanks for your quick reply...Yes the $7000 is addition to my $2500 for FHA. The $7000 is just the closing....the broker fee (processing fee) is 595.00 then the underwriting fee is 695.00...I have not paid to bring down the rate.
The fee worksheet breaks down these fees;
appraisal 470.00
credit report 40.00
Tax service fee 80.00
lenders procession fee 595.00
underwriting fee 695.00
flood certification 19.00
courier to lender 25.00
escrow fee 750.00
title ins 275.00
title endorsement 200.00
title courier fee 50.00
record fees 250.00
city tax/stamps 140.00
state tax/stamps 245.61
transfer taxes 550.00
compliance fee 200.00
survey 325.00
interest 15 [email protected]/day = 144.19
up front Mortage Ins 694.80
Hazard Ins. Premium 1908.00
Then they have a area on the fee worksheet called (Reserves Deposited with Lender)
Hazard Ins.Premium 3mths @$159./mth =477.00
Taxes & Assessment Reserves 4 mths @$208.33/mth =833.32
I am lost so much money for a 69,000 loan is hard to understand for a first timer.
What are you considering as "closing costs"? Often times lump all settlement fees and prorations into what they call "closing costs".
If you're going FHA and the property was not owner occupied (likely not since it's a duplex), the property tax escrow will consume a lot of the money you need to bring to the table. Plus, there will be an escrow for you insurance. On taxes and insurance, the escrows are usually one year.
Without seeing your HUD (settlement statement) it's really hard to judge whether or not you're being "ripped off".
Yea it looks like they are asking for 4 mths of taxes up front which comes to 833.32
as minimal as the price of the duplex you are buying is, what was negotiated in the purchase agreement? being that this is a short sale, obviously the seller themselves is going to pony up zero out of their own pocket...but it appears the bank is not covering any costs either. seller often pays for transfer taxes, stamps and title insurance...but it looks like you're stuck with the bill. is that escrow fee of $750 just buyer's side (split 50/50) or are you covering the entire escrow expense for both sides of the transaction? the premiums and reserves can also be a massive chunk of change as others pointed out. it's probably too late to negotiate anything further, so if this place appeals to you and you can afford the $7,000 for everything...just close and be happy. bottom line is you are getting into a two unit for 3.5% down payment. allow me to reiterate...you are buying a two unit property for a little over $10,000 out of your pocket out the door using a loan insured by the government in the midst of quite possibly the worst housing crisis in american history. what a country we live in, huh?!
as minimal as the price of the duplex you are buying is, what was negotiated in the purchase agreement? being that this is a short sale, obviously the seller themselves is going to pony up zero out of their own pocket...but it appears the bank is not covering any costs either. seller often pays for transfer taxes, stamps and title insurance...but it looks like you're stuck with the bill. is that escrow fee of $750 just buyer's side (split 50/50) or are you covering the entire escrow expense for both sides of the transaction? the premiums and reserves can also be a massive chunk of change as others pointed out. it's probably too late to negotiate anything further, so if this place appeals to you and you can afford the $7,000 for everything...just close and be happy. bottom line is you are getting into a two unit for 3.5% down payment. allow me to reiterate...you are buying a two unit property for a little over $10,000 out of your pocket out the door using a loan insured by the government in the midst of quite possibly the worst housing crisis in american history. what a country we live in, huh?!
It doesn.t matter if I can afford it or not. If I am being charged for fees that don't belong to me then I shouldn't be paying them.
...but now I am faced with the closing cost which is estimated to be around 7000 dollars.
Looking at your list of costs above, it appears that less than half of the $7K is closing costs. The rest are escrow and pre-paid insurance costs.
Of the half that are closing costs, legally you should have received a Good Faith Estimate (GFE) of every one of these costs when you submitted your loan application and the contract on the property. In fact, recent changes to the law now ensure that the GFE you received is very, very close to the fees you ultimately pay. So, this information shouldn't have been too much of a surprise.
Even so, some of the fees seem very high. It appears you're paying nearly 2 points to the broker/lender, and the escrow company/attorney is charging $750, which is crazy.
Next time, shop around and read the GFE before you move forward with your broker/lender...