Are these closing costs too high?

Question

Hello,

I am looking to close on my first property and I just got the paperwork to sign from the lender & the closing costs are about 10% of purchase price(not loan amount).

I know typically the closing costs are a lot lower.

What do guys think?

Purchase price: 80k

Loan amount: 60k

Total closing costs: $8,599

George C. · Answer

@JR Rivas Looks like you are getting "fee'd" to death in my opinion. Example, you are paying lender points + processing fees + underwriting fees, lenders I work with just charge the points as the fee for their service and not these bolt ons on top. There are a bunch of other fees in there that I don't typically see with the deals I do as well. Depending upon the state you are in you will see certain recording taxes and transfer taxes and these can be pretty standard. The hazard insurance and property taxes are fairly standard as well. I'd suggest doing a little comparison shopping with other lenders and ask specifically about these fees listed here and if those lenders have the same costs. I do think you could do better with another lender.

Kyle J. · Answer

I didn't go line-by-line, but yes - that looks high.  Part of the problem is you're paying over 2 points to the lender.  I don't know what that bought your interest rate down to, because you don't list it.  But that's $1,339 right there.

And then $700 for an appraisal on what I assume is a single family house?  Granted that goes to the appraiser, but that should be more like $350-$400.

And lastly, $1,800 for insurance on a $80k house is ridiculous unless there's something unusual going on or you're in a flood zone or something.  You need to shop that around.

JR Rivas · Answer

Thanks @George Cox!

I am in florida. This is through a mortgage broker. I am getting another quote today from a local credit union.

Let's see what happens!

Mike Webber · Answer

@Todd Rasmussen

Aaah I see. I recently read an article (although I believe it wasn't written recently) about the insurance prices in FL. Is that all due to hurricanes or are there other issues?

Todd Rasmussen · Answer

@JR Rivas

Your loan costs are ridiculous. You might be stuck if you don't have an application already processing with another lender though. I think we've had 6-8 week loan closing timelines due to volume lately...

Good luck, worst case it's an expensive lesson. As far as lessons go, people have paid more and learned less.

Todd Rasmussen · Answer

Insurance in Fl is very high compared to most of the nation. Lost of insurers won't even write there.

JR Rivas · Answer

Shopped the insurance got a $1200 rate for the year.

I forgot to mention in the initial post that these are 2 houses on 1 lot which could account for fees being slightly higher like the appraisal fee.

Victor S. · Answer

the lender is giving it to you with no lube. shop lenders, get with a broker, etc. local credit unions are usually best on rate %. also, do you really need a nanny to pay your insurance and taxes for you? wave escrow (might come with a small fee).

Steve Morris · Answer

Don't know FL law, but in OR you should get a prelim GFE and then BEFORE closing title should send a prelim closing statement.  Compare the 2 and ask questions then NOT when you walk into close.

Mike Webber · Answer

@JR Rivas

I just bought a sfh to rent out, only 65k though. My closing costs were 1000 and my insurance is 329 for the year. How much coverage are you getting? The insurance seems really high. Mine covers the cost of the house and 300k in liability, just to compare. I agree w the guy who said you are getting fee'd to death. Paying 2 points and then all the fees on top feels excessive, but I'm not an expert. Your rate is really good at least.

Are these closing costs too high?

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