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Ya know...right now it shows that my monthly FHA insurance is only about $50. So really you have to weigh that in. Is the higher rate and additional downpayment required worth it in the end to not have to pay $50/mo PMI.
You still aren't closing cost free in the end. I read somewhere that some people got their closing costs at $700-$1000 with this same loan. Is it because of the state I'm looking at buying in?
What state are you in? I have never seen them put a limit on closing costs they pay. It will depend on whether you are escrowing or not and if you have HOA, etc. They don't pay any discount points of course but again, they should be waiving all of their lender fees and paying all of the title company fees. The $700 - $1000 may be the discount points and/or HOA stuff and prepaid interest (depending on the date of close).
The closing cost example on the website is just to give you an idea of the typical closing costs you might pay if you didn't go with the No Fee program. It is not the limit of what they pay. With that said, in KS right now the rate is 6.375 with 1.164 discount points (would be $2,211.60 on a $190k mortgage loan) or 6.75 with -.1 points. Other than your prepaids or escrow impounds which you would pay with any loan, you should have no other closing costs. What rate are you comparing this to?
I suppose if you do not include the first year's insurance then it would be different. I like the escrow though. Keeps me out of trouble. Got to pay the insurance....may as well just do it once a month in conjunction with your house payment and get it overwith.
Is there a way to get around paying the up-front insurance costs? Can I pay my insurance premium monthly separate from my house payment?
I'm surprised the recording and tax stamp fees wouldn't be covered because they either covered mine or I didn't have any. As far as prepaid interest, that amount is based on closing at the beginning of the month I presume? I closed on Feb 29th and paid one day interest of like $30. If you are willing to pay the higher rate, you can go without the discount points although they are tax deductible so up to you. As for the homeowners insurance, I have arranged to not escrow but still had to pay the first year up front at closing. $798 seems high, I got a policy from Travelers for about $500 so you can shop around for that. Rates tend to fluctuate a lot lately (just jumped to 6.625!), so I'd look at them periodically over the next month or two as you get closer to buying. I'd try not to lock more than 30 days out if possible as it will cost a little extra in discount points over what is quoted.
I pre-qualed with them last week and the person I spoke with on the phone said they continuously evaluate the program and change the requirements based on the market. That could be why they changed from 5% to 10%.
For what its worth, the rate they quoted me was 6.598% with 1 point, but according to the paperwork I received I would be paying no closing costs. They provided a sheet showing what they would be (about 7K) which scared me at first, but as I read further into the packet there was an addendum that showed that they were waiving everything.
Last edited by Smokipenelope; 07-10-2008 at 08:51 AM..
Reason: Typo
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