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Closing Cost Questions


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This is a loan for a home in MI. I live in IN, and the lender is in CA. This is a "direct lender" that I am dealing with. A MI broker told me there is a 7% cap on closing costs, but I can't find it. Don't have a clue what law she was referring to, whether state or fed.

Can someone tell me if there is a cap, and if so, where the law is?

Also, do any of these fees seem a little extraordinary ($350 for an appraisal review fee), ($66 for tax certification, when the house is being sold by HUD, and HUD, a fed agency is paying the prorated taxes.), (300 Funding fee). How much of this should I fight off?

Loan amount $42,565

No down payment

Origination $851.30 (2%)

Appraisal $275.00 (paying at the door)

Processing $350

Underwriting $550

Appraisal Review $350

Funding Fee $300

Flood Certification $9.50

Tax Service $66.00

Interest Accrued $24.46 (or whatever actual will be)

Settlement/Closing $550 (not worried, HUD pays their own closing agent)

Closing Agent/Attorney Doc $50

Demand Fee $75 (what is that)

Closing/Attorney Courier $45

Recording Fee - Deed/Mortgage $60

Total 3556.28 (8.35% of the loan amount), and this is "NOT" a broker, but a "direct lender". Liars, they sell 100% of their lians. I know they're technically a broker, but whatever. Can someone tell me if we are being robbed?


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There is a Federal Truth in lending statue that highly restricts "High cost loans" and there are state statues also. They are between 5% and 7.99%, just depends on your state.

The only fee that I would think for sure is excessive is the appraisal review fee. I have seen some GFE's list that, but they never are over 95.00.

The term "direct lender" is sometimes a marketing tool, used by several companies that advertise on TV. So many of the loans done today are bought within a few weeks by either Countrywide or Washington Mutual or Ameriquest. (Sounds illogical, but if you, the consumer went to one of them directly, you would most likely pay more than going through a broker.)

Tax Service fee is a lender charge that is charged all of the time.

Most sub-prime lenders charge between 795 and 995 for their underwriting and funding efforts, this company for whatever reason, breaks the different ones apart, maybe to look like they are cheaper.


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I asked them who would be servicing my loan, and he insisted that they were the lender and nobody else would be servicing the loan, but then on the TILA and attached papers, it said they transfer 75-100% of the loans. Yes, I know this is a tactic. So, are you saying that these closing costs are typical, and I should live with it. Or do you think I should try to at least get the appraisal review fee cut in half? I ask because I know that a desk review by a licensed appraiser generally only runs $175. Why would I pay $350? That's one charge that Really bothers me, as well as the $300 funding fee.

Thanks for the input. I just wanted to make sure we aren't getting completely ripped off.

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Yes, I am saying that the appraisal review fee is high, but it may be a take it or leave it situation. Other than a very few portfolio lenders, loan are sold by lenders. Even the "big ones" like CW and Washington Mutual sell their loans. I don't understand why exactly, but am working on a loan now that the 2nd was with CW and now with GMAC, transfered a few weeks ago.


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I sent him an email last night asking to take $400 off the total closing costs. He wants me to call and discuss it. That response was better than a no. Also asked if he would guarantee no changes in those fees once I hit the table. Thanks for everything.

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