please help?

Question

is $5300 too much to pay for all closing costs ?
my GFE reads $4800, now the loan officer calls and says they added $489 more to cover the survey costs..! what do i do ? should i pay it or just look 4 another loan? i have already had the house inspected and appraised which i had to pay for. thanks

Answer 1

A survey is standard. Where I am, some lenders will accept an affidavit of no change if the last survey was fairly recent. Other lenders require a new survey.

A GFE is an estimate, not to the penny actual costs.

Answer 2

It depends upon a lot of factors. Closing costs, properly speaking, are paying for services that are necessary for the loan. Title, Escrow, Appraisal, Inspection, Notary, Recording, Processing, Survey (in some states), other lender mandated fees. Here in California for refinances, I tell people roughly $3400, depending upon loan amount. For purchases where title and escrow are not under my control, it's $1975 plus those fees.

To this gets added however much in loan discount it takes to buy the rate down, or for my smarter clients, a rebate for accepting a higher rate gets subtracted. That's still a cost of the loan, only it's a cost of the money, and not a service cost. You want a lower rate, you pay more in points. That is fact, and anybody who says otherwise is lying or ignorant. You want lower closing costs, you accept a higher rate.

Now, there are some other things that are *NOT* costs of the loan. They include prepaid interest and impound accounts. Those are what they are. If your loan is for $x at y% interest and there are 6 days left in the month when the loan funds, you will pay six times the daily interest charge of (x*y/360). That's not a closing cost, it's interest expense, just like the interest on the loan every month from then on. You borrowed the money for those 6 days. You *are* going to pay interest on it. I always make it a point to pay it by out of my own pocket.

The impound account (if there is one) goes further than that. That's your money, being set aside to pay for your homeowners insurance and property taxes when they are due. You get the money back if you pay the loan off. That's your money, but the bank is collecting it and using it to pay money you owe. It is not a closing cost. Furthermore, it is what it is. No matter who the lender is, it should be the same amount.

Now a survey, if they are required, is a legitimate closing cost. I haven't worked in a survey state for a while, but I used to pay about $400 for them on my client's behalf. They are usually good for ten years.

And someone wrote that Good Faith Estimates are usually high. In what alternate reality is this? The major ongoing issue with the GFE (and MLDS here in California) is that most lenders low-ball it shamelessly.

Here's a question to ask prospective loan providers: "If I tell you I want this right now, will you guarantee that quote in writing as to no more than $X in total loan costs, subject to underwriter acceptance of the loan?" It calls for a simple yes or no answer. Ask it and watch 98% of all loan officers squirm, because they lowballed you badly and the answer is "no."

Answer 3

Well, it seems like a lot. I think I paid closer to the $4800 for mine and that was with a sub-prime lender.

But, I didn't need a survey. Some of thoses costs are already incurred so you have to pay them anyway and besides $489 won't make a difference over the life of the loan. Your credit has already taken a hit (if it's been over 30 days [I think it's 30] since the current lender your working with ran it) and rates could very well go up another quarter of a point in the mean time.

So, if I were you I would just do it and be done with it.

Answer 4

Keep in mind that the GFE is just that, an estimate! The exact costs won't be known until your closing date has been set.

The big items on your closing costs will be:

1. Loan origination fee, typically 1% of the loan

2. Points, 1% per point.

3. Intitial impounds, typically six months worth of property taxes and homeowner's insurance.

4. The first year's property taxes, pro-rated between buyer and seller

5. Interest through the end of the closing month.

6. First year's homeowner's insurance.

Other items include title insurance for the lender and yourself, survey fees, inspection fees, etc. Even on a modest purchase you can easily rack up $5,300.00.

From personal experience, the GFE tends to be estimated high most of the time.

Answer 5

OK, here's a non-helpful answer - it depends upon what your loan balance will be! $5300 is not bad at all if you are buying a 1/2 million dollar home, but if you'll "just" be borrowing 100K, it's a huge amount.

That being said, consider that there are MANY components to closing costs. Some, such as "points" are directly related to the interest rate. Some, such as "document preparation" fees are merely lender-enrichment fees. Avoid paying them, if possible. Just ask nicely to have them removed, or at least reduced. But remember the real estate Golden Rule: "the banks have the gold, they make the rules!!" Many lenders no longer require surveys, if the property is in a platted subdivision. Apparently yours is not one of these.

Unfortunately, many closing costs are pretty much out of your individual lender's control. If your loan is to be sold in the secondary market (don't worry, this is not some illicit white slavery scheme!) to a quasi-Federal company such as Freddie Mac or Fannie Mae (FHLMC or FNMA) almost ALL terms and conditions, AND COSTS, are dictated.


Much more information about these topics is available on my website - http://www.first-time-home-buying.net


Best of luck to you. Just remember - you are definitely doing a good thing by buying your home. Don't worry too much about the closing costs. Make friends with your loan officer!

Answer 6

This is a loaded question because there are so many variables.

What do you mean by CLOSING COSTS? Is short-term interest included in that figure? Tax prorations? Insurance? If so, then maybe not. What is your APR figure and what is the interest rate you are being charged? What is the loan amount? How is your credit? Are you being charged points? If so, how many.

There are a lot of things that go into the equation as to whether or not it is a good deal for you and we need to know those before anyoen can give you a reasonable answer.

Answer 7

Typical closing costs should be 3 - 4% of your loan amount. The survey is NOT considered part of your closing costs.

When buying a home, you should get a survey in just about any case for a single family home (not condo). It saves potential problems in the future with neighbors, easements, etc. Very smart thing to get.

Answer 8

Closing costs are usually 3-5% of the loan.....also the appraisal and inspections are usually pre-paid by the buyer/borrower....

Answer 9

the best way to determinate if your broker telling you the truth is ask him to give you new GFE, which you have to sign anyway and if you don't buy new construction or foreclosure property or this was not on the contract with regular purchase- you should not pay for the survey.

Answer 10

my costs were $4363. my estimate was $4200.
Yours costs are somewhat based on the price of the loan. Ask your broker why it's so much more