Closing costs seem a bit high considering the purchase price?

[Meti Kay]

I have a deal for a good 2 bedroom condo in the works.. Purchase price is 232 with 20% down (46k) it's a short sale so I don't have much wiggle room.. upon my mortgage application I was quoted $11,100 for total closing does this seem high to you on a $186k loan? Land transfer tax is pretty expensive here in NY but does this seem reasonable or is there anything I can do to try to lower them? Any tips, advice.. P.s I'm planning to flip this it needs a minor rehab and market comps are from 290-315k currently But obviously I wanted to keep the costs down as low as possible Thanks a bunch

[Shaun Weekes]

Originally posted by @Meti Kay:

I have a deal for a good 2 bedroom condo in the works..

Purchase price is 232 with 20% down (46k) it's a short sale so I don't have much wiggle room.. upon my mortgage application I was quoted $11,100 for total closing does this seem high to you on a $186k loan?

Land transfer tax is pretty expensive here in NY but does this seem reasonable or is there anything I can do to try to lower them? Any tips, advice..

P.s I'm planning to flip this it needs a minor rehab and market comps are from 290-315k currently

But obviously I wanted to keep the costs down as low as possible

Thanks a bunch

 Taxes are expensive in NY as you know. Look at your Pre Paids which include taxes and insurance multiplied by a certain amount of months. I don't know when the taxes are due in NY state but this is how the months of reserves are calculated.

Example:

Just say your taxes are 2% of the purchase price which equals $4,640.00 per year. If the bank requires 6 months of reserves your Pre Paids for taxes will be $2,320.00. This amount will be refunded to you in the event that you refinance (you’ll have to open up a new impound account) or sell. In your case you'll get most of it back because this is a flip. Total closing costs also include insurance reserves which work the same way with one additional difference. At least here in CA we add reserves for insurance and the policy also gets paid 12 months in advance.

Insurance Example (CA, I'm not sure about other states)

The policy is $1,200 per year. So $1,200 up front or 12 months plus whatever the reserve amount is. Let's say the reserve amount is 6 months then your total would be $1,800.00. 12 months up front plus 6 months of reserves @ $100 dollars per month.

As you can see Pre Paids add up and in this example would total over $4,120 which would represent a large amount of your closing costs. But as I stated before you would be receiving a large chunk of this monies back.

Talk to your loan officer and have him/her break down the closing costs for you. It should also be broken down in the LE (Loan Estimate) that should have been sent to you within 3 days of your lender pulling your credit.

I hope this all helps and good luck with your transaction.