Are my mortgage rates and fees too high?

Question

Hello. As a first time buyer I went forward with the mortgage company my realtor recommended and now I'm worried I did not get enough competitive offers for a loan. About us: My partner and I have excellent credit (~800), <1% debt-to-income, stable and verifiable employment for the last 5 years, never declared bankruptcy. Our offer of $600k was accepted.

Does anything about the closing cost or rate seem unusual? I started getting calls from other mortgage companies telling us we're overpaying. We close in 7 days.

Loan: $560,000
Rate: 2.875% 
Down payment: 6.5% 
Type: Conventional; 30-year fixed
PMI: Buying out upfront 
State: California

Borrower-Paid 
A. Origination Charges $2,746.07
0.134 % of Loan Amount (Points) $751.07 
Processing Fees $695.00
Underwriting Fees $1,300.00

B. Services Borrower Did Not Shop For $7,530.45
Credit Report to S1L FBO Factual Data $84.00
Flood Certification to S1L FBO ServiceLink National Flood $9.00 
Mortgage Insurance Premium to National $4,988.45
Title - Endorsements Title Company $50.00 
Title - Escrow Fee Title Company $630.00
Title - Lender's Title Insurance Title Company $994.00 
Title - Loan Tie In Fee Title Company $325.00
Title - Notary Fee Title Company $225.00
Title - Recording Service Fee Title Company $25.00 
Title - Sub Escrow Fee Title Company $150.00
Title - Wire Fee Title Company $50.00

C. TOTAL LOAN COSTS (Borrower-Paid) $10,276.52
Loan Costs Subtotals (A + B) $10,276.52

D. Taxes and Other Government Fees $200.00
Recording Fees Deed: $200.00 

E. Prepaids $1,723.74
Homeowner's Insurance Premium (12 mo.) $929.04 
Prepaid Interest ( $44.15 per day) $794.70 

F. Initial Escrow Payment at Closing $4,604.10
Homeowner's Insurance $77.42 per month for 3 mo. $232.26 
Property Taxes ($767.35 per month for 6 mo.) $4,604.10
Aggregate Adjustment -$232.26

G. Other $2,399.00
Reconveyance Fee to County Land Trust $1,512.50
Title - Owner's Title Insurance (optional) $886.50 

H. TOTAL OTHER COSTS (Borrower-Paid) $8,926.84
Other Costs Subtotals (D + E + F + G) $8,926.84

I. TOTAL CLOSING COSTS (Borrower-Paid) $19,203.36 
Closing Costs Subtotals (C + H) $19,203.36

Thank you.

Chris Mason · Answer

2018: OMFG I GOT 4.375% AFTER PUTTING 20% DOWN WITH AN 800 FICO, MY LOAN ORIGINATOR IS A HERO!!!

2020: i dunno about all this, 2.875% with no PMI and less than 10% down seems a bit high guys, what do? is 2.875% and no PMI a scam?

Nik Moushon · Answer

I bought my person residence in July 2019....it was 4.125%. I just did a refi and got 3.2%. Your rate is great.

Not much you can do about fees. You might be able to shop around but you arent going to save that much. Sometimes the lender will reduce their fees some if you just ask. 20k to close on 560k is pretty good.

Joshua Jones · Answer

@John Warren thank you. @John Magnusson you stated in your list of items above that you are "buying out your PMI." That is a term that is reserved for conventional loans so i am assuming you are doing a conventional loan single family. That percentage is based on your down payment and credit score. The only thing the the lender really controls is lender fee (and their company sets that), and if there's any origination fee. That's it. The rest is third party fees.

Why are you buying out the PMI? If you have good credit, it is not a lot per month.

John Warren · Answer

@John Magnusson I think you are looking at the loan estimate that they send out early in the process right? I am a realtor, not a lender, but every time I work with a newer client I always have a spot on my checklist to have a conversation with them when the loan estimate is sent over. @Joshua Jones is my lender and he can probably provide more clarity, but there are a lot of costs that get thrown on there that aren't paid by the buyer as they are seller costs. Also, you didn't share if this is a single family or a 2-4 unit. This makes a big difference. I have a lot of clients who want to house hack with an FHA loan with so/so credit and then they compare that to how a single family home with perfect credit, etc would be.

Your overall terms look phenomenal in the grand scheme of things. The last thing to remember is that if this is an investment, your TENANTS pay the interest for you. Do you really care that much about the rate? Most of us will refinance that loan in a few years to get cash out and there is a case to be made for taking worse terms for lower out of pocket costs when you look at deals.

Tom Shallcross · Answer

@Chris Mason nailed it, we're spoiled with today's rate.

Also, if I'm reading this correctly, Sections B, D, E, and F are going to be pretty much consistent across the board with whomever you choose.

Sam Abazari · Answer

Hi John,

Purchasing a home is always an and exciting journey and an emotional roller coaster, specially the last couple of weeks.  With being only 1 week away I would high discourage you from shopping as that would jeopardize your closing and your earnest money.  That being said, it does also depend what state you're in.  The prices you mentioned are competitive but on the high end here in Chicago but would be considered unacceptable in other places.  You are definitely not overpaying by much and seem to be in a good spot.  Congratulations on the new purchase!

Shaun Weekes · Answer

You could have put down less and eliminated the PMI buyout to save on cost upfront.  You could have done better but you don't have any PMI and your rate is under 3% so you could have done a lot worse.

Are my mortgage rates and fees too high?

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