Why so much in closing costs with FHA loan (Mesquite: sales, real estate)

[tmiz72]

I bought a home in the east Mesquite area, built in 2004. Newer subdivision in Falcon's Lair. I was financed with a FHA loan. I had to pay 3% down payment and 3% in closing costs. HUD paid an additional 3%. The total closing price was over $7,000 on a $120,000 home. So why does FHA not imply that closing costs are separate from down payment. My income was over $60,000 a year, so my loan officer/realtor said I did not qualify for down payment assistance? Is that true? Any answers would help.

[Grainraiser]

I can't answer your question but I will say welcome to the neighborhood. Mesquite is a great place to live.

[Spree]

Doesn't it depend on how many points you pay when you originally apply for a loan? Points can be negotiable with the mortgage company to a degree.

Always ask for the final closing paperwork a few days prior to closing so that you can go over it and ask questions, look for discrepancies so that you aren't surprised the day of closing.

[nsumner]

Your closing costs had to include prepaids which include 1 year homeowners insurance + a couple months in escrow + a couple months of taxes and HOA dues. Those are not considered closing costs but they are due at closing.

All that should have been explained to you prior to purchase. Also, highlighted on the good faith estimate you get from the lender.

So you deduct these fees from what you paid at closing, and you will see that you are much closer to the 3% that HUD paid for you.

FHA requires a single, up-front mortgage insurance premium equal to 2.25% of the mortgage to be paid at closing (or 1.75% if you complete the HELP program). This initial premium may be partially refunded if the loan is paid in full during the first seven years of the loan term. After closing, you will then be responsible for an annual premium - paid monthly - if your mortgage is over 15 years or if you have a 15-year loan with an LTV greater than 90%.

Also, with a salary of 60K and depending what your DTI is (debt to income ratio) your loan officer would have to decide if you qualify for DPAP (down payment assistance programs).

Congrats on your new home!

Naima

[loves2read]

my question is did you make this deal using a real estate agent or just on your own?
was it a foreclosure that you refinanced?

real estate agents normally let their clients know exactly how much money is due at closing because the deal does not go through if the client does not have the money...

you can "buy down" a mortgage by putting in more up front --there is less risk to the mortgage company that way
you do have to pay for insurance and taxes up front--sometimes you can transfer the taxes pre-paid by the owner to your account as part of the settlement transaction (coming off the selling price)...

[caligurltotx]

I am missing something. If 3% down and approx 3% in closing cost that is about 7200. So are you saying that HUD paid 3% towards closing cost and you still had to come out of pocket $7000??? Or is it $7000 on top of the 3% down? So you came out of pocket over $10,000? Are you sure they credited you for HUD's 3%?

I too say look over your GFE and see what you were charged.

[carlinagirlntx]

Has the rules changed for FHA downpayment assistance in the past few years? We purchased our home in SE Mesquite in 2006 and paid nothing in closing costs using FHA. Between builder and downpayment assistance everything was covered except $1. Our income was close to 100k.

[nsumner]

The rules haven't changed much. Since you mention a builder you probably used the builder's lender so what they very likely did was raise the sales price to cover the downpayment and closing costs and rolled them into the loan. This makes it easy for you not to have to come to closing with cash but you are paying for it ultimately... just being financed.

Naima