Closing Costs

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Topic Author
hafjell
Posts: 188
Joined: Tue Nov 10, 2015 8:49 am

Closing Costs

Post by hafjell »

Hi, first time home buyer in contract. Lender is being vague about closing costs. I'm wondering which are negotiable and which are inevitable. He's listing:

(Updated with numbers from the loan estimate.)

Item Project Cost
Processing fees $999
Underwriting fees $649
Origination charges $1,648
Appraisal Fee $1,200
Appraisal re-inspection fee $200
Credit report $120
Verbal VOE $100
Unshopped Services $1,620
Closing Protection Letter $25
Courier Fee $50
Doc Fee $25
E-File Fee $5
Endorsement Fee $50
Lender's Title Insurance $3,160
Settlement Fee $653
Wire Fee $25
Title--Shopped $3,993

Total Loan Costs (4+9+18) $7,261

Recording Fees $60
Transfer Taxes $0
Taxes & Gov't Fees $60
Homeowners Insurance Prem/yr. $3,252
Mortgage Insurance $0
Prepaid Interest $48
Prepaids $3,300
Homeowners Insurance--2 mos $428
Mortgage Insurance $0
Property Taxes $1,897
Initial Escrow $2,325

Total Other (22+26+30) $5,685


Total Closing Costs (19+31) $12,946

Do these seem legit?
Last edited by hafjell on Tue Apr 20, 2021 2:58 pm, edited 1 time in total.
giddyup969
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Joined: Mon Nov 30, 2020 10:27 am

Re: Closing Costs

Post by giddyup969 »

Did the lender not give you a loan estimate? You should demand one if you have filled out an application. That standard format helps find out where they are trying to sneak in $'s.
Topic Author
hafjell
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Joined: Tue Nov 10, 2015 8:49 am

Re: Closing Costs

Post by hafjell »

giddyup969 wrote: Tue Apr 20, 2021 11:29 amDid the lender not give you a loan estimate? You should demand one if you have filled out an application. That standard format helps find out where they are trying to sneak in $'s.
Thanks for that tip. I've updated the numbers above from the loan estimate. I wonder if my loan officer is presenting higher costs than expected to keep expectations low.
MrJedi
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Re: Closing Costs

Post by MrJedi »

Section A is typically negotiable, these are fees directly charged by the lender.

Section B is non negotiable. These are third party services that are hired, but the lender is only allowed to pass the fee directly to you, no upcharging.

Section C is more third party hired stuff like title and escrow. This can be negotiable or you can even choose your own title company, etc. if you want.

Section D is government/tax stuff that is standard and non negotiable.

Section E is prepaids. The home insurance is something you need, but you are choosing the policy, it is not really negotiable through your lender. The prepaid interest is just interest based on your interest rate and the day of the month you close. Mortgages get amortized to the 1st of each month, this takes care of the partial month before the amortization schedule starts.

Section F is initial escrow funding for your insurance and taxes. You can negotiate to remove it and pay it yourself directly (lenders don't like this though and may charge a fee) rather than pay into an escrow each month, but you are not really saving any money since you have to pay eventually, some people don't like the lost opportunity cost of prepaying into an escrow. The numbers here are just based on your insurance premium and property taxes though, not controlled by your lender.
123
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Joined: Fri Oct 12, 2012 3:55 pm

Re: Closing Costs

Post by 123 »

A lot of the charges will vary based on the purchase price of the property and/or the loan amount. They could be excessive for a property selling for $250K but a bargain for a $10 million property.
The closest helping hand is at the end of your own arm.
Topic Author
hafjell
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Joined: Tue Nov 10, 2015 8:49 am

Re: Closing Costs

Post by hafjell »

123 wrote: Tue Apr 20, 2021 4:27 pmA lot of the charges will vary based on the purchase price of the property and/or the loan amount. They could be excessive for a property selling for $250K but a bargain for a $10 million property.
Thanks. Under contract for $602,500. We are putting 20% down.
Topic Author
hafjell
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Joined: Tue Nov 10, 2015 8:49 am

Re: Closing Costs

Post by hafjell »

MrJedi wrote: Tue Apr 20, 2021 4:16 pmSection A is typically negotiable, these are fees directly charged by the lender.
Thanks. Do they seem in line with a sale price of $602.5K? We did some legwork that the mortgage company could/should have done. Nothing major, but worth noting.
Cigarman
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Re: Closing Costs

Post by Cigarman »

Have you shopped this mortgage to a variety of sources including a mortgage broker? I am in NC and have gotten 5 mortgages through my local broker with no closing costs. These were not "no cash out of pocket" loans where the closing costs were rolled in to the mortgage but true "no closing costs". You may pay a slightly higher rate but the payback period is about 8 years. Just something to think about. Of course this does not apply to the prepaids that are required.
manuvns
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Re: Closing Costs

Post by manuvns »

you should negotiate on all of the items below , i don't pay first 3 and 1200$ is lot for appraisal .

Processing fees $999
Underwriting fees $649
Origination charges $1,648
Appraisal Fee $1,200
Appraisal re-inspection fee $200
Credit report $120
Verbal VOE $100
dukeblue219
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Re: Closing Costs

Post by dukeblue219 »

That is a hefty appraisal charge. I've never seen an appraisal that was more than a 15 minute walk around, maybe with a measurement or two. $400 is more in line with what we've paid on a house a little above your price.
rascott
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Re: Closing Costs

Post by rascott »

Seems outrageously high..... but you need to shop around. Actually should have shopped around prior to going under contract. Now you're a bit under the gun time wise.

Go over to AIMloan.com and pop in your numbers and see what they offer. Or also check Lenderfi. No personal info needed at either to see their costs.

Where are you located?

I popped in your sales number at Lenderfi and for a 2.75% 30 year fixed, they are offering a $3k lender credit... and with that credit TOTAL closing costs are $121. That's in my area.... your locality could vary.
Williams57
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Re: Closing Costs

Post by Williams57 »

I recently had to pay an appraisal fee of $700 for a 370 SF studio. I have been told that's the new reality. I heard that in some cases if your net worth is above the amount borrowed the appraisal can be waived.

Closing costs are such a PITA! Next property I'm buying hopefully I'll have enough to self fund (borrow against myself) or cash (if that makes sense in that climate)
Topic Author
hafjell
Posts: 188
Joined: Tue Nov 10, 2015 8:49 am

Re: Closing Costs

Post by hafjell »

Cigarman wrote: Tue Apr 20, 2021 6:40 pm Have you shopped this mortgage to a variety of sources including a mortgage broker? I am in NC and have gotten 5 mortgages through my local broker with no closing costs. These were not "no cash out of pocket" loans where the closing costs were rolled in to the mortgage but true "no closing costs". You may pay a slightly higher rate but the payback period is about 8 years. Just something to think about. Of course this does not apply to the prepaids that are required.
Thank you. Yes, I have shopped around, but not thoroughly and not with the right companies I'm learning. More below. Appreciate your insight.
Topic Author
hafjell
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Joined: Tue Nov 10, 2015 8:49 am

Re: Closing Costs

Post by hafjell »

manuvns wrote: Tue Apr 20, 2021 6:41 pm you should negotiate on all of the items below , i don't pay first 3 and 1200$ is lot for appraisal .

Processing fees $999
Underwriting fees $649
Origination charges $1,648
Appraisal Fee $1,200
Appraisal re-inspection fee $200
Credit report $120
Verbal VOE $100
Costs on the appraisal may be as low as $525 but lender pencils in higher #s to make sure we have enough cash at closing. I will ask about the origination charges. Thanks for your help.
Topic Author
hafjell
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Re: Closing Costs

Post by hafjell »

rascott wrote: Tue Apr 20, 2021 7:29 pm Seems outrageously high..... but you need to shop around. Actually should have shopped around prior to going under contract. Now you're a bit under the gun time wise.

Go over to AIMloan.com and pop in your numbers and see what they offer. Or also check Lenderfi. No personal info needed at either to see their costs.

Where are you located?

I popped in your sales number at Lenderfi and for a 2.75% 30 year fixed, they are offering a $3k lender credit... and with that credit TOTAL closing costs are $121. That's in my area.... your locality could vary.
Great tips on the websites. We are in a resort town in the Rockies so facing Covid immigrants from the coasts whacking the market. No complaints; just reality.
I did shop around but the company I'm with now was far and away the most responsive. They are not on the Purchase and Sale Agreement so maybe room to negotiate or switch lenders?
Where are you? What's typical # of days to close there?
Thanks for your insight. Really appreciate it.
Topic Author
hafjell
Posts: 188
Joined: Tue Nov 10, 2015 8:49 am

Re: Closing Costs

Post by hafjell »

Williams57 wrote: Tue Apr 20, 2021 7:35 pm I recently had to pay an appraisal fee of $700 for a 370 SF studio. I have been told that's the new reality. I heard that in some cases if your net worth is above the amount borrowed the appraisal can be waived.

Closing costs are such a PITA! Next property I'm buying hopefully I'll have enough to self fund (borrow against myself) or cash (if that makes sense in that climate)
Sorry for your pain. That's egregious. Our problem isn't cost; it's time to respond. We had to pull strings within the community. First appraisal date came back 6 weeks from PaS signing...
rascott
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Joined: Wed Apr 15, 2015 10:53 am

Re: Closing Costs

Post by rascott »

hafjell wrote: Tue Apr 20, 2021 8:20 pm
rascott wrote: Tue Apr 20, 2021 7:29 pm Seems outrageously high..... but you need to shop around. Actually should have shopped around prior to going under contract. Now you're a bit under the gun time wise.

Go over to AIMloan.com and pop in your numbers and see what they offer. Or also check Lenderfi. No personal info needed at either to see their costs.

Where are you located?

I popped in your sales number at Lenderfi and for a 2.75% 30 year fixed, they are offering a $3k lender credit... and with that credit TOTAL closing costs are $121. That's in my area.... your locality could vary.
Great tips on the websites. We are in a resort town in the Rockies so facing Covid immigrants from the coasts whacking the market. No complaints; just reality.
I did shop around but the company I'm with now was far and away the most responsive. They are not on the Purchase and Sale Agreement so maybe room to negotiate or switch lenders?
Where are you? What's typical # of days to close there?
Thanks for your insight. Really appreciate it.

We have been doing 45 day closings here. I used lenderfi for a refi last year and found them awesome to work with (best and easiest mortgage I've done, and I've done a bunch of them)
Topic Author
hafjell
Posts: 188
Joined: Tue Nov 10, 2015 8:49 am

Re: Closing Costs

Post by hafjell »

rascott wrote: Tue Apr 20, 2021 8:24 pmWe have been doing 45 day closings here. I used lenderfi for a refi last year and found them awesome to work with (best and easiest mortgage I've done, and I've done a bunch of them)
Off topic: what are you typically expecting to pay for closing costs on a refi?
rascott
Posts: 2562
Joined: Wed Apr 15, 2015 10:53 am

Re: Closing Costs

Post by rascott »

hafjell wrote: Tue Apr 20, 2021 9:26 pm
rascott wrote: Tue Apr 20, 2021 8:24 pmWe have been doing 45 day closings here. I used lenderfi for a refi last year and found them awesome to work with (best and easiest mortgage I've done, and I've done a bunch of them)
Off topic: what are you typically expecting to pay for closing costs on a refi?

I paid nothing last year. Took a rate (2.625%) with a high enough lender credit that it was $0 cost (think it was actually like $64 back to me, or something silly.)

But that's the thing with comparison of closing costs...... you've got to also compare the rate options with points or lender credits.

Check the refi mega thread on here to see what people are paying today and for what rates.
Topic Author
hafjell
Posts: 188
Joined: Tue Nov 10, 2015 8:49 am

Re: Closing Costs

Post by hafjell »

rascott wrote: Tue Apr 20, 2021 9:49 pmCheck the refi mega thread on here to see what people are paying today and for what rates.
Will do. Thanks.
phxjcc
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Re: Closing Costs

Post by phxjcc »

Most will tell you to budget 2% in a traditional purchase.

If you want a no-cost option the lenders will do hat assuming your end-state LTV is <= 80%.
boglegirl
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Re: Closing Costs

Post by boglegirl »

Are people finding that any of these lender charges are negotiable? (I'm not talking about title charges & others that can be shopped). We took out a loan recently and found that was not the case - when we expressed concern about high lender charges, we were told "that's the price" and "it's not negotiable." We ended up getting a great loan from a credit union. But I was really surprised the local banks we talked to were absolutely inflexible even when they knew they were losing the deal.

ETA: ours was for construction financing which is why we couldn't go with one of the online lenders.
Jags4186
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Re: Closing Costs

Post by Jags4186 »

boglegirl wrote: Wed Apr 21, 2021 9:29 am Are people finding that any of these lender charges are negotiable? (I'm not talking about title charges & others that can be shopped). We took out a loan recently and found that was not the case - when we expressed concern about high lender charges, we were told "that's the price" and "it's not negotiable." We ended up getting a great loan from a credit union. But I was really surprised the local banks we talked to were absolutely inflexible even when they knew they were losing the deal.

ETA: ours was for construction financing which is why we couldn't go with one of the online lenders.
Everything on the lender end is negotiable. A lender may not be willing to negotiate though and almost always require a better competing offer in order to improve their offer. The numbers in Section A and B may not be changeable, but can be made up for with a lender credit. At the end of the day, it is up to you to get the best overall deal possible for your situation. Just because two lenders are offering the same interest rate and term does not mean the offers are comparable.

Initial offers with some places have $10,000s of wiggle room. In my own case, over the course of a week I was able to improve an offer on a $300,000 loan by reducing my out of pocket costs from ~$2000 to putting near $4500 in my pocket, and a quarter point better interest rate. Always check out the refinance megathread to find out what the current best offers in the market are.
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