Closing on a new construction-HELP (Houston: insurance, credit, loan) - Texas (TX) - City-Data Forum

Glorious Houston · 10-09-2013, 01:15 PM

hello eveyrone -
Multiple people have told me its going to be expensive to close on a new construction house - and we might incur some unexpected hidden charges - is this possible ?
Normally at closing what charges /payments are expected
sorry 1st time buyer just trying to understand everything
GH

hulio82 · 10-09-2013, 02:31 PM

get a good faith estimate from your lender. that will give you a good approximation of what your final costs will be.

cheryjohns · 10-09-2013, 02:56 PM

The reason no one can pin it is because the lenders vary quite a bit on closing costs. You can control your insurance (1 year, plus 3 months if you escrow) - but lender fees depend on who you choose. Go to two or three and get Good Faith Estimates. They are not allowed to surprise you with substantial increases now. Try not to shop over three lenders. Also important is your own circumstance. Are you going FHA with 3.5% down (and paying PMI forever) - or are you going conventional? Try to talk to a lender that will give you options: 5% down with a 80%/15% loan will eliminate PMI.

jojobeans2 · 10-09-2013, 02:57 PM

Actually, I figured new construction homes are easier at closing... because don't they offer a ton of money if you choose their lender? We had to recently choose between a new construction house with nearly free closing costs (builder gave us like 8k in closing costs) vs. a resale home with expensive closing costs... ended up with the resale but only because it was better in every other aspect.

cheryjohns · 10-09-2013, 03:15 PM

Quote:

Originally Posted by jojobeans2

Actually, I figured new construction homes are easier at closing... because don't they offer a ton of money if you choose their lender? We had to recently choose between a new construction house with nearly free closing costs (builder gave us like 8k in closing costs) vs. a resale home with expensive closing costs... ended up with the resale but only because it was better in every other aspect.

Not always. Sometimes the builder will do thing like give you $2K in closing costs - but their lends costs $4K more. Depends. That's why the GFE is important.

Glorious Houston · 10-09-2013, 03:34 PM

we have been offered close to 6k in closing costs if we go with the builders' lender.
I am hoping I can get a Good faith estimate from them- did not know that before
(no PMI- 20% down )

cheryjohns · 10-09-2013, 04:16 PM

Good for you on the 20%!

Check with another lender and ask for that GFE to make sure the builder lenders are not pumping up costs to get back the money the builder "gave" you.

Even if they do a little, it still pays to look at the whole picture. Example: They "give" you $6K but the closing costs are an extra $4K. It still pays to go with the builder lender, even though, in reality, you are only getting $2K to go with them - unless their interest rate is higher than the other lender, to the point that you would be better off giving up the $2K.

jasonamd · 10-09-2013, 05:25 PM

I got GFE's from 3 other lenders besides the one my builder used an the one the builder used was the highest (all interest rates were the same). But with their contribution to closing costs and other incentives, it was cheaper to go with the builders lender. The closing costs stated on the GFE I got before construction started was actually a bit higher than the final costs. So I ended up paying less than I was expecting.

hulio82 · 10-10-2013, 06:50 AM

Quote:

Originally Posted by Glorious Houston

we have been offered close to 6k in closing costs if we go with the builders' lender.
I am hoping I can get a Good faith estimate from them- did not know that before
(no PMI- 20% down )

if you are not doing an escrow, check to see if they are charging a escrow waiver fee. We bought a new construction and put 20% and the lender was charging us an escrow waiver fee, but as part of our negotiations- we asked them to waive the fee.

Also, we went with our builder's lender and our GFE was very close to what we ended up paying. just make sure you review all the numbers. when we got the final HUD, we found couple of errors (not sure if these were intentional) such as the lender forgetting to include the agreed upon credit or waiving the escrow fee.

Glorious Houston · 10-10-2013, 10:57 AM

Quote:

Originally Posted by hulio82

if you are not doing an escrow, check to see if they are charging a escrow waiver fee. We bought a new construction and put 20% and the lender was charging us an escrow waiver fee, but as part of our negotiations- we asked them to waive the fee.

Also, we went with our builder's lender and our GFE was very close to what we ended up paying. just make sure you review all the numbers. when we got the final HUD, we found couple of errors (not sure if these were intentional) such as the lender forgetting to include the agreed upon credit or waiving the escrow fee.

oh wow- thanks ! I will do that !!