Closing cost Estimate (Wells: insurance, mortgage broker, credit report)

[nawvtanzi09]

Thanks in advance for any insight that can be given to me. In the process of finding a right loan for a recent home purchase.

The builders lender (Wells Fargo) is offering a rate of 3.875 interest rate, fixed conventional. The closing cost seems quite high $6652.75 on a 160k Loan and $1261.56 for cost of prepaid interest and escrows. Is this normal? Or should I be shopping around, just wary about going to different places and having hard pulls on my credit card which could lower my credit score.

Any help would be appreciated, thanks.

[skids929]

prepaids usually drive up the costs of closing costs, but that does seem a little high..Ask for an itemization and then have your lawyer review the costs to see if they're in line with the going rates.

[txgolfer130]

The prepaids will be the most expensive part of your closing costs at this time of year (or should be), but your saying your prepaid & escrow are only 1,200?! I would ask detailed questions as to what the other 5,400 is for.

[FalconheadWest]

When you look at lender's and their fees, you need to know what you're supposed to be comparing. You can't compare your prepaids and escrows as the lender doesn't control that. The day you close controls that. The home owner's insurance you pick controls that.

The lender controls their fees and ONLY their fees. Underwriting, administrative, processing, loan origination, discount points...

Compare apples to apples if you want to compare.

[Debsi]

Credit inquiries

Will my FICO score drop if I apply for new credit?
If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.


Credit Report Inquiries: How Credit Checks Affect Your Credit Score

Closing costs sound high to me. Guessing you're paying "discount points" to buy down the rate. 1 point = 1% of your loan amount = $1600

You should definitely check on those prepaids - what property taxes are they estimating? It is common on a new build for an unscrupulous loan officer to make your monthly payment appear lower by only collecting for the current assessed tax value on the county website, which will be an "unimproved" value. Your taxes then shoot way up the following year when the county realizes - hey, there's a house there! If your escrow payment has not been properly adjusted before then, you will find your payment for the following year goes up a ton as you will have to make up for both the shortage and the new higher tax amount.


Appraisal should be around $375-$400.

You should definitely shop around - try some local lenders or brokers as well as the big box bank.

[nawvtanzi09]

Yeah not paying anything for points and its still $6652.75.

I will have to shop around and see what is available in the market currently.

[JoycMarr]

Go to a good mortgage broker. They do the shopping around for you.

[nsumner]

You have to figure out from your good faith estimate what the closing costs are and what the prepaids are from that 6652.75

The prepaids are items the lender cannot control, they will be the same no matter which lender u use. Although, sometimes some lenders collect more months than others.

Since you are mentioning the builder, make sure that some of the closing costs are not tied to using that lender only. Are they not paying for any of them? Also, the title policy is pobably included in that, with a preowned home, the seller typically pays for it, but builders pass it on to the buyer, on a 160K it's $1164. If you're doing an FHA loan, the MIP will be included too (it can rolled into the loan though), same if you're doing a VA, you'll have the VA funding fee included too. These are all negotiable items with the builder.

Naima