Need opinion on FHA 203K closing costs

Member since 2020 · 1 post · 0 votes

Hello everyone,

We are closing on our first property and here are the closing numbers. They tend to change from the lender and needed guidance if these look correct ? Our purchase price is 420,000 with 5,000 credit from the seller at time of closing

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Paul Welden
Real Estate Agent · Tempe, AZ · Member since 2011 · 1k+ posts · 543 votes
6y
Looks reasonable to me. But ............
The 1% of Loan Amount is the add'l origination fee that lenders charge for the 203k. This is standard and customary.
The 203k Consultant Fee is usually collected by the 203k Consultant at the time of service and it usually only added to the closing costs if the borrower wants to be reimbursed for it, meaning you are financing that cost for the life of the loan (typcally 30 years). A $500 203k Consultant fee equates to rehab costs $7,500-$15,000. So, if you paid this directly to the consultant and do NOT want to get reimbursed, you can get this removed.
The Progress Inspection fee is actually for max 5 inspection fees used to pay the 203k Consultant each time a draw inspection is requested and the 203k allows for max 5 draw payments to the contractor.
*I'm concerned that the progress inspection fee amount is $1400, because of the cost of rehab is $7500-$15,000 (based on the 203k Consultant fee), you probably only need 1-2 inspections.
I don't see the $5k in lender credits you mentioned.
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