FHA 1st buyer - Experienced 203k lender needed

[Djoye G.]

Hi everybody!

My husband and I are trying to buy the house we are currently living in. that will be our first purchase and we really don't know much about real estate so my apologies if the questions I am about to ask are redundant. I am amazed by the good advice seen on this website so I am hoping to get some tips and recommendations from experienced contributors/realtors/lenders.

A little background:

The house we are currently renting is a duplex single family house located in Union NJ. The owner is a relative that wants to sell the house to us. We agreed on the purchase price of $110k. We have a credit score over 740, assets over 15k and liabilities under $1000. We both have jobs and make between 100-120k a year combined.

Now, we hired a real estate lawyer and signed a contract with a 2% credit given to us from the seller towards closing cost so about $2200. We will go for a 203k FHA loan since the house has around $7k worth of repairs based on the estimate given by our contractor. We were recommended to a broker/lender. He asked us some questions about our financial situation and then requested that we send him 1040, w2, bank statement.... We did send all requested documents and received an loan application package. We were never told that we were pre-qualified nor qualified by the way (is it normal?). The loan application we received was pre-filed but the numbers are raising questions.

Questions:

With a $110k purchase price and $3900 down deposit the loan amount should be $106,100+$6200 (203k loan). We also understand that we will have to paid 203k fees and FHA insurance. The disclosure form we received sates that we will need $10,500 to close and that is without the down payment or the seller credit. The broker told us not to worry about those numbers and to "simply sign the papers, we will see later" as numbers will be final later.

Honestly we are skeptical, maybe for no reasons but it does not sound clear to us. We will end up paying close to 13k in closing cost on a $116k house. Does it sounds right? FYI we got a fixed rate of 4.625% (no pre-payment penalties, no balloons) on a 30 years mortgage.

We were also told this by our lawyer " The estimate is $12,743. The numbers are intentionally high. When you get to closing if the estimates are less than actual the bank has to re disclose to you and wait 3 additional days. If the estimates are higher than actual no problem. Speak to your mortgage rep about first time buyer. They are estimating you will need about &14,873 cash to close. That includes $5,390 financed costs added to mortgage amount they are offering to you."

So what are your advice on this situation guys. And by any chance do you have recommendation on FHA lender experienced on 203k in NJ so we can shop around. We can afford this house and believe to be qualified, we just want a fair deal.

Thank in advance,

Djoye