Can someone please evaluate this GFE?

Question

Cash-out Refi for Florida Condo

$225k, 4.75% - 30 year fixed

Part A

Origination fee: $950 , no points

Part B

Appraisal $635

Credit Report $22

HOA Certification: $150

Title Services and Title Insurance: $1730

Survey $375

Tax service fee: $78

Flood Life of Loan: $19

Govt recording charges: $344.50

Transfer Taxes: $1237.50

Total estimated settlement charges: $5570

Does this seem reasonable?  Should I bargain to have the origination charge reduced or removed?

Thanks in advance for any replies!

Wayne Brooks · Answer

The mortgage recording fee is 0.35%, about $700. Actual doc recording probably $100-150.  There are no "Transfer Taxes" on a refi.  On a sale it would be 0.7%, about $1600.  Title insurance, without the reissue discount, about $1100, title search $150-225.

Dion DePaoli · Answer

Not setup well.

Subject property is a condo. The appraisal should be more like $350. You should not need a survey (not to mention there is no endorsement fee for the same). The origination fee "might" be able to be lowered. We would have to understand your LTV. Market rates are around 4.2%. This deal is 0.50% higher than market. That rate increase should be off setting some of the risk increases (rate increase) due to cash out and condo. Like I said, LTV would have some bearing there too. The Flood Cert should not be needed since the HOA likely has a master policy for common areas and your unit is likely higher than a flood can reach. If the HOA does not carry flood insurance, go to a board meeting and ask why, in Florida that is important and can cost the owners costly repairs allocations.

The title insurance cost might be a little high, typically the insurance company can offer you a discount insuring the gap from previous policy to moving forward. You will need to give them a copy of your previous title policy. Usually cuts the full cost down to 65% to 75%.

I do not see property hazard insurance listed. That will be an added cost. Even though the HOA carries a master policy (unless they do not) you will need insurance for the drywall and in (contents).

The credit report fee is too high. They can likely get a tri-merge for about $9.00. They can't make a profit on that, if I remember correctly. I would have it struck all together, it's a cost of business for them.

What this looks like is the "template" for all their GFE's and not as much as a refined quote of fees. Not all that uncommon. The GFE is to be updated upon any changes and is to be within $250 of final costs. They are not obligated to refine this if you have not made a formal application.

The best way to see how that GFE fairs is to get a couple of different lenders to quote you. When comparing loans you can also ask for a copy of the related Truth In Lending Disclosure which will show the loan costs as an Annual Percentage Rate (APR). The TIL will not show costs outside of the loan costs, you will need the GFE for that. However, it will help you compare interests, points and fees. That is what it is designed for.

Rainier Guiang · Answer

Shaun Weekes

Yes you are right, the property is in Florida and is an investment property that is owned outright.  This is why they said the loan was at a higher interest rate than market. LTV is 75%.  There are no fees paid by the lender.

Thanks for your insight!

Rainier Guiang · Answer

@Dion DePaoli @Daren H. Shaun Weekes

Thank you all for the detailed replies.  So would it be safe to say that the GFE is a "maximum" amount that could be charged? And that it would be more thank likely this one was just a standard estimate of the fees and it is likely that they will be less when all is said and done.  Yes, $635 is alot for a condo appraisal!

Shaun Weekes · Answer

Hello Rainier,

There is a lot of additional information that is required to evaluate this GFE.  You would need to show us the fee sheet to see if you're getting any costs paid for from the lender.  The appraisal fee is something that is out of the lenders control in regards to fees.

I noticed you live in Cali and the refinance is in FL so this is a second home or Investment property which means that there will be extra hits to the rebate of this loan.  Which will in turn move the interest rate up if this is lender paid.  If this loan is borrower paid then you'll either have more closing costs paid for or a lower rate.  Also since this is cash out there will be additional hits and your LTV plays a huge roll as well and so does your fico score in regards to pricing.

There aren't any transfer taxes on a refinance, credit report fee is something people like to do but it's not my cup of tea personally.

I could be wrong but does Florida still have those doc stamp fees or something to that effect?  ( I haven't done a loan in FL for over 6 yrs )  I would check on that because it's more money that you would have to come up with.

Certain items on the GFE can't move up or down more than 10% and other items have zero tolerance so keep that in mind when you review the initial GFE compared to the final GFE and ask what those fees are.  You LO or broker should be able to answer those questions right away.

There is more that I could mention but you need to either ask him or her how they're coming up with these fees or get a couple of quotes.

I hope this helps and have a good one.

Daren H. · Answer

A lot of times the banks will inflate the numbers in the GFE. I believe they do this because of RESPA. It has to do with the closing cost GFE not exceeding the final closing costs (I think it is by more than 2%. If actual closing costs exceed the GFE by more than 2% the buyer doesn't have to pay it. You can see how giving a high GFE gives the bank a cushion not to exceed 2%). I am positive the actual closing costs will be less. If this is truly a GFE from the bank, keep in mind most of the quoted numbers are ballpark estimates by the bank because the bank only controls their fees (i.e. origination, processing, underwriting, etc). Most of the other fees (i.e. appraisal, title services, title insurance, government recording fees, survey, etc.) are third party fees which the bank has no control over the price. They are just plugging in an inflated estimate in the GFE. What you really want to focus on in a GFE from a lender is the lender fees and compare them to other lenders. Get 3 quotes from lenders on the same day (generally the same time of day) for the same type purchase. Compare the lender fees, rates, term and see who has the cheapest loan.

Can someone please evaluate this GFE?

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