Question About Good Faith Estimate and Closing

16 years ago

Everyone was so helpful with my last question that I was hoping I could get some guidance on Closing negotiations and my bank's Good Faith Estimate on fees. Please feel free to add any other advice that you wish about closing on a new construction house. Here are the numbers:

CLOSING FEES

Appraisal Fee: $325

Loan Processing: $300

Underwriting fee: $250

Settlement or Closing Fee: $500

Title Insurance: $500

Recording Fee: $115

Tax Research Fee: $56

Tax Service Fee: $21

Credit Report: $9.70

Estimated Closing: $2106.70

PREPAID ITEMS

Interest for 15 days @ $26.30 = 394.50

Property Taxes: 8 months @ $175 = $1400

Estimated Prepaid Items= $1794.50

PMI-UFMIP-VA Funding fee financed: $2,269

Question 1) Would you recommend negotiating on any of these fees? If so, what is the best area to negotiate?

Question 2) "PMI-UFMIP-VA Funding fee financed" Is the upfront mortgage insurance premium negotiable? Is this rolled into my mortgage?

Question 3) I close on the 23rd of this month. How did the bank come up with a fee of "Interest for 15 days @ $26.30 = 394.50" ? What 15 days would they be referring to?

Thank you for any assistance or advice! Please feel free to add any other advice that you wish about closing on a house. I greatly appreciate your help, as this is my first home and first time in the meat grinder!

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Comments (6)

dave_donhoff
16 years ago
Hi newbuyer,

Question 1) Would you recommend negotiating on any of these fees? If so, what is the best area to negotiate?

"Negotiation" requires that you have some kind of leverage... something to offer in return for a concession requested. At this point you're too close to your closing date, and don't have the rest of your terms locked down anyway, so you'll just be fighting against yourself & not gaining any benefits.

Question 2) "PMI-UFMIP-VA Funding fee financed" Is the upfront mortgage insurance premium negotiable? Is this rolled into my mortgage?

Depends on what kind of program you are using, conventional, FHA or VA.

Question 3) I close on the 23rd of this month. How did the bank come up with a fee of "Interest for 15 days @ $26.30 = 394.50" ? What 15 days would they be referring to?

You're looking at a GFE, its just an "estimate." They threw the numbers from a range in order to be compliant with the regulations that require it issued within 3 days of application (but which has no requirement regarding accuracy at all.)

At THIS point, you're quite a bit "day late, dollar short" for any significant financial structuring. You're pretty much going to have to cross your fingers & hope you chose a trustworthy loan professional who respects you and wants a longterm relationship.

If you chose a retail lender with a faceless clerk... pray.

Luck!
Dave Donhoff
Strategic Equity & Leverage Planner
newbuyer06
Original Author
16 years ago
The loan is an FHA loan through National City Bank.

They received high ratings for customer satisfaction, and the builder recommended them as the lender of choice for our area. (Which probably means they get some type of kickback.)The loan officer seems very responsible, and even automatically lowered our rate once we entered our 45 day window before closing. Our original loan was locked at 6.375%. He called on a Friday a few weeks ago and said he re-locked it at 6.25%.

So we have a fixed 30 year mortgage at 6.25 % APR.
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Hi Altcharm, I looked at the 2 GFEs... and they aren't even comparing anything on the same basis.... Different loan amounts Different MIP estimates Different rates Different closing costs. MOST IMPORTANTLY... you seem to be of the illusion that they are reliable, or in some way "binding".... they ARE NOT... they are simply "best-guesstimates" in the current approximate rate environment. EVERYTHING could change after you get started (and probably will) to the tune of a few hundred bucks one way or the otehr, and a little rate adjustment one way or the other. That's why they are called "Good Faith ESTIMATES" and not "Provider Quotes" or "Bids." Tossing away all the numbers (they're close enough for horseshoes as they are...) A) WHICH loan professional DO YOU TRUST? B) Which is the most competent & experienced? Choose the jockey, not the horse. Luck! Dave Donhoff Leverage Planner
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susanjn
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Since closing dates are always subject to slippage, they just don't know how many days of prepaid interest you will have. Since you will have fewer than 15 days left in the month, it will be lower -- unless of course, your closing date slips into the next month. In essence, you pay interest for every day you own the house, in monthly chunks. The size of the first chunk depends on how many days you will own the house that month. Lots of people like to close near the end of the month to make this number lower. But it really makes no difference in the end. Every other month you will pay the interest in arrears rather than up front.
pamghatten
16 years ago
PMI-UFMIP-VA Funding fee financed: $2,269

That is the FHA determined insurance that is financed/payable on all FHA loans. It is not negotiable. You will also, most likely, be paying a monthly FHA insurance fee also. That will be included in your monthly "Escrow" with your taxes and homeowners insurance.

The fees listed above, besides the Underwriting & processing fees, are paid to third parties and are supposed to be the actual costs paid for those fees/services.

If you can negotiate at this point and still close on time, you could push on the underwriting and/or processing fees.
berniek
16 years ago
Did I miss a loan origination fee?
Without it (or even with one), the estimate looks very reasonable to me.
justnotmartha
16 years ago
I agree - though I don't see a mention of insurance impounds or payment of the first year's premium. Is this a condo?

Question About Good Faith Estimate and Closing

Comments (6)

dave_donhoff

newbuyer06
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Question About Good Faith Estimate and Closing

Comments (6)

dave_donhoff

newbuyer06Original Author

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newbuyer06
Original Author