closing cost fees? (insurance, loan, interest rate, rate)

[arun196]

Im about to close a house at k hov through k hov finance mortgage. For a house
of 240,000 they are charging me 7000$ closing costs. Its not like khov is offering me a great interest rate, but 10,000$ incentive if I go thru with their mortgage loan.Im a first time buyer. I want to ask, is 7000$ for closing cost high or low in phoenix, az. How much would you pay.

[ChipL]

That does seem kinda high, but my experience is FL and NC. Without seeing your GFE it's hard to say. How much are they charging you in origination fees, discount fees and /or broker fees?

The way builders use that incentive to entice you to go with their lender can make it difficult to consider other options, but you always have the power to negotiate the above costs.

[sierraAZ]

Originally Posted by arun196

Im about to close a house at k hov through k hov finance mortgage. For a house
of 240,000 they are charging me 7000$ closing costs. Its not like khov is offering me a great interest rate, but 10,000$ incentive if I go thru with their mortgage loan.Im a first time buyer. I want to ask, is 7000$ for closing cost high or low in phoenix, az. How much would you pay.

Sounds highish for the price of the house (I don't think anybody can avoid the origination fee of $2,400, so you go on from there), but it depends on what RE tax and hazard insurance reserves are on the GFE. Also, depends how many days of interest they used on the GFE. Makes a difference and it will change depending on the closing date. If you didn't opt out of being taxed on the fully assessed value, this expense would be on the GFE as a reserve as well, I believe (I decided to opt out). You can expect anything and everything. I'm having the same battle right now after thinking everything was ironed out. My loan counselor was changed midstream (also builder's lender) and the new one turned everything upside down. It's like starting the whole process from scratch with another lender. On my previous GFEs I actually didn't have any RE tax and hazard insurance reserves. This one claims now that 4-months worth of those is mandatory. I don't really care about that one way or another, but if you're cash-strapped, you might.

Other than that, yes, all lenders will try to stiff you for as many junk fees as they possibly can get away with. Builders' in-house lenders - even more so. Basically, their goal is to take back everything you've been given in the form of incentives for use at closing. I did have some new fees she tried to impose on me removed (btw, their excuse is that these are 3rd party fees and they have miraculously changed ; it's total BS as the title company is normally theirs as well), but that wasn't my main concern at all. Oh, this takes the cake! She was telling me the underwriting fee was changed because I had changed my lot in the meantime... Hellllooo, try this one on somebody else... as if the underwriting fee has anything to do with the lot.

I have leftover money I'm planning to use to buy down the rate. My new sweet 'adviser' is trying to convince me that she'll use 1.375 points to reduce the rate by .25. That's more than double what I was quoted before on a 45-day lock and still waaaay more than the quote on the 60-day lock. She hasn't even told me what lock length she had in mind as we speak... I know the prices vary somewhat, but more than double... c'mon! Nobody ever mentions paying more than 1 point for .25 reduction of the mortgage rate in any article I've read.

I'm getting so mad about this that I'm considering informing her I'm not desperate, I'm an excellent borrower, and I just might take my business elsewhere even at the cost of losing the incentives! Next time somebody calls perhaps she will be "no longer with the company" (what happened unfortunately to my previous counselor). I can't believe they're trying these moves in the financial situation they're in...

Here's some reading for you:

http://www.familyresource.com/financ...t-shouldnt-you

http://www.sideroad.com/Mortgage/real-estate-closing-costs.html (broken link)

http://www.mtgprofessor.com/A%20-%20...junk_fees1.htm

http://mortgagecents.blogspot.com/20...exist-and.html

http://www.thetruthaboutmortgage.com...interest-rate/

[TimtheGuy]

Builders, builders lenders, builders title companies...I wouldn't trust any of them. Can you say conflict of interest? Make sure you take your GFE to a solid, agressive pricing lender and make sure it pays to use the builders lender. Play hardball with these builders...they are sitting on lots of inventory. You need to know what the rate/cost structures are out in the 'real world' as opposed to the closed circle of the builders world.

I would look at using a buyers agent, my own lender and my own choosen title company when looking at new construction. Also in this environment be sure to get an owners title policy!

[sierraAZ]

Originally Posted by TimtheGuy

Also in this environment be sure to get an owners title policy!

I did a little research on this - http://robertevangelist.edinarealty....egoryID=338476. Of course, it is a valid point if buying a resale house. I don't quite see problems like this arising with new construction, but I may be wrong. Do you mean the possibility of the builder going bankrupt and the chance of getting a lien on your house from some sub-contractors who haven't been paid...?

[MMullin]

The answer to your question really depends upon what the individual costs are within the total $7k you are being quoted. However, "costs" of 2-3% of the loan amount are common.

Normally there is a 1% Origination Fee, another $1,200 or so in misc. lenders fees, about $1,000 in fees to the title company (not related to the lender) and then another couple of grand for the establishment of an impound account for taxes and insurance (again, not related to your lender). You'll find that the true loan related fees are less than 1/2 your total "closing costs."

Missing from your post was the interest rate you are being quoted. I find consumers often miss this important detail while focusing on the "outrageous" loan costs. A .5% difference in your rate will cost over $600 per year in extra interest.

You certainly want to examine and understand your closing costs but it is unlikely that K Hov's mortgage company is out of line far enough to erase the benefit of the $10k the home building arm is giving you.

Of course you could try to force them to give you the incentive AND use your own lender. In this market they may not walk away from your deal even if you decide to use your own lender.

Good Luck