A friend of mine just got a loan of $270,000 to buy a condo. At the end, they hit him with $11,000 in closing costs. Do you think that is excessive? What justifies these ridiculous closing costs anyways? $11,000 to do paperwork? Aren't they making thousands over the life of the loan?
2007-02-20 05:47:39 · 12 answers · asked by trer 3 in Business & Finance ➔ Renting & Real Estate
Without seeing what those costs were, and who they went to, it's impossible to say. I'd expect hard costs upwards of $6000 for a loan that size, plus the escrow account setup, which could run another couple grand. If you're in a state with high deed taxes and title insurance, like Florida, you might very well end up around $11K. Or it's possible he bought his rate down by paying higher upfront fees. Or maybe he got overcharged. You don't know, and neither do I.
And just because the bank makes money eventually on the loan, doesn't mean that the dozens of people who worked to create the loan don't need to get paid today.
It takes a lot of time, a fair amount of upfront money, and quite a few people to originate, process, underwrite, and close a loan. Borrowing money is not an entitlement, and it shouldn't be free. I almost wish every credit card came with high upfront fees. Maybe people would think twice about taking out so many.
2007-02-20 06:05:59 · answer #1 · answered by Yanswersmonitorsarenazis 5 · 1⤊ 0⤋
Keep in mind that closing costs don't just mean money going to the lender. There are many, many different parties that have to do work to get a loan closed. You have to pay for an appraisal, a title search, broker fee (not the same as lender fees), etc...if this friend looks at the HUD statement, the costs should be itemized somewhere, and you can see who got what.
That being said, 11K does seem a bit hefty.
2007-02-20 05:53:18 · answer #2 · answered by Omni D 5 · 0⤊ 0⤋
4% is excessive. He didn't have to sign off on that if it wasn't what his prior paperwork was showing. If it was...and he still paid then he's a dope! They likely sold him a higher rate loan too! So they got $$ on the front end and the back end!
2007-02-20 05:52:15 · answer #3 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
That includes taxes, homeowners insurance, inspections reports, appraisal reports, and many unavoidable government fee's. Plus, realtors, title clerks, mortgage brokers, & lenders need to make money, too. It's not a rip-off - it's just the way things work.
2007-02-20 05:56:06 · answer #4 · answered by autumn 5 · 0⤊ 0⤋
Not defending it; but remember it's spread around to a lot of places; home inspections, deed prep, title search and insurance, county taxes and recording fees, comissions for realtors. Also no way to determine if he paid for things like home warranty.
It's not just paperwork
2007-02-20 05:51:42 · answer #5 · answered by wizjp 7 · 1⤊ 0⤋
Yes, closing costs suck, but remind your friend that he can write them off at the end of the year when he itemizes his deductions on his income taxes. He'll also be able to write off property tax, interest paid on the mortgage, and the usual contributions to church and charity, etc.
2007-02-20 06:00:24 · answer #6 · answered by sarge927 7 · 0⤊ 0⤋
It varies from state to state but you have to pay the costs of deed stamps and mortgage stamps. (in Florida 70 cents for every hundred dollars for deed and 35 cents for every hundred for other) PLUS you have to pay taxes an commission. It takes alot to buy and sell and the state wants there cut in everything.
2007-02-20 05:52:38 · answer #7 · answered by *Aimzie* 3 · 0⤊ 0⤋
Yeah, that sounds really excessive. I only had to pay a few hundred dollars at my closing on a $100,000 home.
2007-02-20 05:50:18 · answer #8 · answered by Blunt Honesty 7 · 0⤊ 0⤋
considering how everyone and their relatives get a piece of ya at closing, i really think the consumer should start getting a fee just to show up at the closings.
2007-02-20 05:59:33 · answer #9 · answered by michaelpaul1963 1 · 0⤊ 0⤋
I totally agree.
2007-02-20 05:50:24 · answer #10 · answered by heartscared 3 · 0⤊ 0⤋