Am I Being Ripped Off By My Lender? (First time buyer)
Member since 2023 · 3 posts · 1 vote
Am I Being Ripped Off By My Lender? (First time buyer)
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Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
2yThe upfront costs you may have are: title (insurance/CPL/stamps/surveys/any add ons, settlement/escrow, appraisal, credit, wire, notary, tax, transfer tax, insurance, prepaid interest, impounds, HOA fees, and points if the product requires. There are other costs which depend on state and county.
Once you actually apply - give them six pieces of financial information about you- they are required by law to give you dollar numbers within a very small margin of error. Did you provide your social security number and date of birth and other details? If you actually applied (provided your financial package) the broker could be fined, and they know this. We cannot know from your post what actually happened. Perhaps the mortgage guy was not paying attention to details on your call. Lenders are required to tell you the rate and the APR verbally and in advertisements. On the phone he should have said: generally the rate for what you say your FICO is --- is 8% 30 year and the APR is 9.119 ~ or whatever it is. Then you would have asked what does that mean??? Answer is the actual rate is 8 but there are many set up costs which get averaged into the rate and divided by 12 months to give you an idea of comparing the other costs.
I hazard to say you knew there are some other costs than just the down payment.
Title is regulated and the same everywhere.
Taxes depend on the state/location/total dollar amount
Appraisal has pricing ranges, pretty much the same and you cannot choose them.
Insurance, settlement/escrow, notary, and some costs vary greatly depending on who the seller picked for settlement.
Do you not have an agent/Realtor? They should have questioned how much money you have to cover everything, though they are not required to do so. A good agent wants to make sure you have the bones needed to make it to closing.
You need to get an independent insurance broker on the phone TODAY and get a written quote. Insurance is a mess today.
You have time to go elsewhere. Get all your documents in clear pdf files and label them after you call two independent insurance brokers licensed in that state, then get a mortgage person with license in that state who takes the love and care that you need to get this done. It's not all about the rate, if they communicate with you in the way you need that is vital.
Congrats on having your offer accepted.
10 Replies
- 2yPreston DeanBusiness MemberRealtor · Fort Worth, TX · Member since 2021 · 779 posts · 368 votes
Gary, Im so very sorry your mortgage broker forgot this huge part of the transaction. How do you know you are supposed to ask about something that you don't even know is a thing (Closing Costs). Your mortgage lender probably assumed you already knew about this. When someone (myself included) is in the business for a while they sometimes forget to take a step back and lay out all the small details for their clients & forget to mention all the things that they might think needs to be mentioned.
If I were you, I would not chose a different lender at this point, unless they can get you a cheaper rate. I am sure you already have but I would sternly let your loan officer know that this is a huge detail that they missed but help refine their craft by giving them constructive criticism.
Mistakes happen and I am sure your loan officer is more tore up about it than you are because their reputation and your business is on the line.
Sorry this happened to you!
United Real Estate DFW Properties 565 Reviews - Rental Property Investor · St. Louis, MO · Member since 2022 · 125 posts · 124 votes2y
Quote from @Gary Hirthler:
Our mortgage broker "forgot" to mention closing cost (our bad for not doing thorough enough investigating and researh, AND now trust is a bit fractured) - I'm wondering (I've gotten 5 calls this morning from mortgage companies) should I have shopped around more? Any adivse?
We are set to wire deposit today to go into escrow.
Your time and thoughts are much appreciated!
Gary
Closing costs are something that should be already known if you are this far in the home buying process. It's like knowing that there will be sales tax when you buy groceries. Typically they are around 3% of the purchase price. Your lender, or even realtor should have mentioned this, but they aren't trying to rip you off by including these.
Sounds a bit too late to do any shopping around for the best rate, but if it's a reputable lender and a large company, they will be competitive with their rates. Smaller lenders like local banks and credit unions will typically have a better interest rate or less closing costs, but in this market it's not going to be much of a savings. Also, if you haven't shopped around for home insurance yet be prepared to be shocked. Home insurance is 2x-3x times what it was last year. - 2yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Gary Hirthler:
Our mortgage broker "forgot" to mention closing cost (our bad for not doing thorough enough investigating and researh, AND now trust is a bit fractured) - I'm wondering (I've gotten 5 calls this morning from mortgage companies) should I have shopped around more? Any adivse?
We are set to wire deposit today to go into escrow.
Your time and thoughts are much appreciated!
Gary
Hey Gary,
A licensed mortgage broker is supposed to provide you with a Loan Estimate that shows you the closing costs. There are laws that protect you from any lender not disclosing closing costs.
I would suggest you find another lender and know the facts from the start.
LuxePrivate Investments LLC 572 Reviews - 2yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Account Closed:
Quote from @Gary Hirthler:
Our mortgage broker "forgot" to mention closing cost (our bad for not doing thorough enough investigating and researh, AND now trust is a bit fractured) - I'm wondering (I've gotten 5 calls this morning from mortgage companies) should I have shopped around more? Any adivse?
We are set to wire deposit today to go into escrow.
Your time and thoughts are much appreciated!
Gary
Closing costs are something that should be already known if you are this far in the home buying process. It's like knowing that there will be sales tax when you buy groceries. Typically they are around 3% of the purchase price. Your lender, or even realtor should have mentioned this, but they aren't trying to rip you off by including these.
Sounds a bit too late to do any shopping around for the best rate, but if it's a reputable lender and a large company, they will be competitive with their rates. Smaller lenders like local banks and credit unions will typically have a better interest rate or less closing costs, but in this market it's not going to be much of a savings. Also, if you haven't shopped around for home insurance yet be prepared to be shocked. Home insurance is 2x-3x times what it was last year.It's not too late to shop if he's sending out an EMD. This is very early in the process. Depending on the loan type it typically takes 21 days to close and can be expedited if the Appraisal is ordered on a rush.
You can also extend your closing date, (which I wouldn't suggest as it will leave a bad impression on the seller's side). But still, you have options. Don't feel pressured to move forward if it's not in your best interest.
LuxePrivate Investments LLC 572 Reviews - Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes2y
You still have some time but you probably won’t get much of a break on closing costs from someone else honestly—a lot of that stuff is baked in. What’s your structure now?
Agreed this is more on you than the mortgage broker but we all make mistakes and last minute panics are understandable. I doubt you are being ripped off.
- Member since 2023 · 3 posts · 1 vote2y
Wow, thank you all so much for your wisdom and inputs.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2y
Did you not get a loan estimate? Closing costs would have been clearly laid out on it.
District Invest Group545 Reviews - Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes2y
Quote from @Russell Brazil:
Did you not get a loan estimate? Closing costs would have been clearly laid out on it.
I'm reading it as he just went into escrow and just got his initial loan estimate.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Gary Hirthler:
Our mortgage broker "forgot" to mention closing cost (our bad for not doing thorough enough investigating and researh, AND now trust is a bit fractured) - I'm wondering (I've gotten 5 calls this morning from mortgage companies) should I have shopped around more? Any adivse?
We are set to wire deposit today to go into escrow.
Your time and thoughts are much appreciated!
Gary
if the closing cost number has no surprise I would not bother too much especially if it's conventional. The conversation about closing cost should be done informally even before you receive any pre-approval.
- Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes2y
The upfront costs you may have are: title (insurance/CPL/stamps/surveys/any add ons, settlement/escrow, appraisal, credit, wire, notary, tax, transfer tax, insurance, prepaid interest, impounds, HOA fees, and points if the product requires. There are other costs which depend on state and county.
Once you actually apply - give them six pieces of financial information about you- they are required by law to give you dollar numbers within a very small margin of error. Did you provide your social security number and date of birth and other details? If you actually applied (provided your financial package) the broker could be fined, and they know this. We cannot know from your post what actually happened. Perhaps the mortgage guy was not paying attention to details on your call. Lenders are required to tell you the rate and the APR verbally and in advertisements. On the phone he should have said: generally the rate for what you say your FICO is --- is 8% 30 year and the APR is 9.119 ~ or whatever it is. Then you would have asked what does that mean??? Answer is the actual rate is 8 but there are many set up costs which get averaged into the rate and divided by 12 months to give you an idea of comparing the other costs.
I hazard to say you knew there are some other costs than just the down payment.
Title is regulated and the same everywhere.
Taxes depend on the state/location/total dollar amount
Appraisal has pricing ranges, pretty much the same and you cannot choose them.
Insurance, settlement/escrow, notary, and some costs vary greatly depending on who the seller picked for settlement.
Do you not have an agent/Realtor? They should have questioned how much money you have to cover everything, though they are not required to do so. A good agent wants to make sure you have the bones needed to make it to closing.
You need to get an independent insurance broker on the phone TODAY and get a written quote. Insurance is a mess today.
You have time to go elsewhere. Get all your documents in clear pdf files and label them after you call two independent insurance brokers licensed in that state, then get a mortgage person with license in that state who takes the love and care that you need to get this done. It's not all about the rate, if they communicate with you in the way you need that is vital.
Congrats on having your offer accepted.
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