Closing costs??

Question

We are in the process of buying our first home, this process is soo daunting and confusing. We were quoted one amount we would need at closing, then another. Then it seems like our closing costs are $15,000, which seems really high? Then another mortgage guy called our attorney today and said HE was handling our mortgage now. I am soo confused. HELP!

The cost of the house is $305,000. We live in NJ so sadly, this is actually a decent price. We have 2.5 % to put down, or more if we had to, but it really didn't seem to affect our payments much. We are supposed to be encorporating a portion of the closing costs into the loan, since they were so high. I am thinking we really need to shop around; the house is already under contract, so I don't think it would affect it too much. I'm so confused. If someone could email me, that would be great. Thanks!

The attorney said the mortgage that he had spoken to today was the first communication that he had even had with a company on our behalf. He suggested I call Sam, who we were inititally dealing with, and find out what's going on. He said the mortgage industry is very volatile right now.

Answer 1

Closing costs are tricky, depending on if you are impounding yoru taxes and insurance into the loan the lender may be requiring what is called reserves, which are costs to close. Lets say tax on the property is $500 a month, and the lender wants to pay them for you because you are obtaining above 80% of the value of the home. The lender will require you to deposit anywhere from 2-7 months of the amount in an escrow account they use to pay your yearly taxes from. So if your closing costs were lets say $6,000 they now just went up to cover the impound account. If you are working with a mortgage professional they should be explaining all this to you. I am a mortgage professional and would be happy to answer any questions you have, I am not looking to get your loan what so ever, I just want to help

Answer 2

What do those closing costs include? Are they truly closing costs, or do they include recording, taxes and insurance escrows? Your costs should include the appraisal, flood certification, title work (these can be quite high depending on the amount of the loan), maybe a survey. You should have a good faith estimate that breaks down the closing costs. Call a couple other lenders and find out whey they're expected closing costs would be, making sure you're comparing apples to apples. Some lenders give your the closing costs and leave out the other things to be paid at closing. That might be why you got two different estimates.

The other mortgage guy...is he from the same lender? If so, that's OK. The first guy might have quit or something. If not, did you go through a mortgage broker? If you did, you may have agreed to changing horses in mid-stream, so to speak. If you applied for a mortgage at Lender A through Lender A, Lender B shouldn't be involved at all.

You have an attorney; supposedly he's experienced at all this. Have you asked what he thinks?

Answer 3

15,000 is very high but you need more info to fine out why. Ask for a detailed list of costing cost and your realtor should explain it all to you. If not dump the house and find a new realtor!

With a number that high you probably paying points to bring down your interest rate. The thing about points is you have look at how long it take to recoupre the cost. If you pay 1 point (%) to bring down the interest rate .25% then the math goes like this.

$100,000 loan @ 30 years @ 7%
$665 monthly payment
$100,000 loan @ 30 years @ 6.75%
$648 monthly payment

If you paid 1 point ($1000) it will take 5 years (58 months) to make back the money.

hope this helps

Answer 4

There are many answers to your question: closing costs and down payment amounts are often confused with home buyers. It would be very difficult to offer a blanket answer to the closing costs questions without knowing your particular situation first. In general $15,000 in closing costs is very extreem, but it really depends on the state you are buying in, the interest rate you are getting, and some other factors. On average true closing costs should run you $2,000 to $5,000 in addition to normal tax and insurance escrows. You want to get to know the Loan Officer that is handling your transaction, and don't be afraid to ask questions. A good mortgage Loan Officer will have no problems in educating you along the way and you should be confident that he/she has your best interest at heart.

Answer 5

There are no stupid questions to ask when you are making the biggest purchase of your life. It sounds like that are handing you off so you might want to think about handing them off by shopping your rate. I suggest you go speak to another mortgage broker who will provide a comparable good faith estimate to the one your have already received to see if you are getting the best deal.

Answer 6

Ask your attorney for an estimate of the closing costs, as he knows them to be. Then ask him to explain each one in simple English so that you understand them.
This really isn't difficult, just don't be afraid to ask questions.
$15,000 may or may not be high, depending what costs the current owner has prepaid, what your state taxation laws are, etc.

Answer 7

Shop around. If you're working with a realtor, they can help you with the process. A Title company might be able to give you some advice too.

Don't let any company tell you "THEY are handling it." That's way to pushy & might be trying to hide some bad deals you are getting or something.

Answer 8

i would say it is high...i paid 3500 closing cost on my home of 200,000,