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I've attached a pic of the pre-approval/cost estimate that we got...
1) Are these good loan terms?
2) I'm a bit confused... This is our builders preferred lender, and they are supposed to pay all closing costs... Does this account for that or no? I didn't know if that was considered in the line "costs paid by lender/seller/3rd party"
3) How much of the $6,999.67 is closing costs and how much is down payment?
Down Payment = 3.5% of $200k = $7,000. The form - which looks like one your genius lender created, and is not an official Disclosure form - - mentions neither your down payment, nor the appraisal fee, both of which should be considered.
Your lender sucks. But the builder is "paying the closing costs," meaning it's built into the price of the house you are buying.
Get a Good Faith Estimate, Itemization of fees, and a Truth In Lending form. Make sure they take into account whatever down payment you would be placing, as well as the appraisal fee. Post those.
They're covering everything but the down payment - - meaning 96.5% of the closing costs are being rolled into your loan.
The $3,377.50 MIP (Mortgage Insurance Premium) from page 1 is rolled into the loan, so back that out of the total, then add in the "prepaids" (taxes/insurance/days of interest) and you get the $ amount of their contribution.
Rate is decent. I'm sure the Loan Officer is a friend of a friend of the builder, so good luck with that. But your Total out of pocket seems to be the 3.5% of the price.
Not in the least. It is similar to an individual raising the price of their home by the amount of closing costs and "paying" them on behalf of the buyer. But they are rolled into the loan, and the down payment. You are paying for the price of the home, so moving those fees into the home price allows them to be rolled in to the loan, for the most part.
It is written in a confusing way but they do pay all the closing cost..
Your cash to close is 6,999.67, which is your down payment (3.5% * 200k = 7000), that's it. they can't pay your down payment.
But lets see the math..
Apprximate closing cost is 10,020.62 but this number has the FHA Upfront MIP of $3,377.5. This is rolled on the loan (200K - 7000 + 3377.5 = $196,377 that you are financing) . Therefore, the total cost if you remove that would be 10,020.62 - 3377.5 = $6643.1 plus prepaid $1823.17 = $8466.27
Now add your down payment 7000 + 8466.27 = $15,466.27. This is the total cost and downpayment. Now let's take out the sellers payment
15,466.27 - 8467.12 = $6,999.15 That's is the number that you have to bring to the table, which is your down payment of $7000
Wow, okay that is confusing!! Thanks for the awesome breakdown though, it makes more sense. Now I've just gotta look up what FHA Upfront MIP and Prepaid... Have to brush up on mortgage terms. Such a newbie!
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