Closing first vacation home mortgage - are these normal costs?

Question

We're doing the disclosures now and I was quite surprised at the 2.469% of Loan Amount (points) Origination charge which brings the total Origination charges to $16,500 (Property cost is 645K, 10% down). Our lender says that's normal because its a vacation home.

Another big one would be $3367 in Lender's Title insurance. Just wondering if this is all normal? Thanks!

Another big one would be $3367 in Lender's Title insurance. Just wondering if this is all normal? Thanks!

Peter Walther · Answer

I believe title insurance rates in Texas are promulgated by the state so the premium will probably be the same wherever you go. Here's a link to a Texas title insurance premium calculator.

Title Insurance Premium Calculator - Independence Title

Janet Pritchett · Answer

Hi Jade.

Lender's Title insurance seems high, but that could be because of location. For instance, I quote $210 in Indiana. This is something you can shop for, so you can call title companies to see what is normal.

What is hitting you for rate is the LTV and the fact that it is a second home. Both of those things will contribute to the higher cost of the rate.

John Burke · Answer

On a Fannie Mae loan, your scenario has a major Loan Level Price Adjustment (LLPA) of 4.125% for a second home with a loan to value of 85.1% to 90% plus a hit of .75% and another for .25%. Then you have price improvements of .110 and .050 for total of 4.965% in LLPAs.This means that the rate has to pay enough to cover the LLPAs plus whatever the lender is trying to make.In case like this, where the LLPA hits exceed what the rate pays, that difference is charged to the consumer. Any lender offering a Fannie Mae or Freddie Mac mortgage, has to charge the same LLPAs. The only way to avoid them is to put more money down or you need a lender that offers their own product. What rate were you quoted?

Jason Wray · Answer

Jade,

Thats is because you using a lender instead of a bank.  You should only be required to put 10% down and your points whoudl be ( 1 point) not over 2.40%.  When you use a Big bank you avoid having to pay the extra "middleman" fees and points.  If you have any questions feel free to give me a call or send me an email its not to late even if your within a week or so to closing!  My goal is to always help bigger pockets members save time and money.

Raymond J. Rodrigues · Answer

@Jade Deguzman, that seems a bit high for points. I would reach out to another lender just to compare notes. This is all dependent on your credit score, property type, etc.

Closing first vacation home mortgage - are these normal costs?

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