Financing in River Falls>Question Details

April Schmitz,  in River Falls, WI

Are inspection and appraisal fees included in Closing Costs?

Asked by April Schmitz, River Falls, WI Sat May 8, 2010

Hello, I was told by my banker that my closing costs would be 3% of the sale price of my home ($179,000). I am wondering if appraisal fees and inspection costs are included in this or if this would be an addition to the 3%. I didn't receive a good faith estimate as it was a scramble to get the home.

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First, why is your banker quoting you the closing costs of 3%? This is usually written in your Purchase Contract when negotiating with the seller. Did you ask for 3% on the contract? Or are you having to flat out pay all the closing costs because the seller wouldn't contribute?

Second, I'm sure there's a few more facts, but, it doesn't take but a few minutes to give a client a "Buyer's Cost" breakdown or a GFE. Has escrow provided you some sort of HUD Settlement statement showing an "estimate" of closing costs and fee's?

I've heard of a few changes with lenders during the process, but my question to the lender would be, "Why all these changes"?? What has caused this to occur during the process? Did your credit change, your debt ratio, etc.?

If they can't give you definitive answers to your concerns, it may be a good time to escalate it to maybe the branch manager. It's your money, interest rate, etc. You need a better answer to this.

Also, what advise is your agent giving you? Their input may provide some sort of clarity to this.

Wow, sorry you're going through such a tough transaction.

Best of luck!
Web Reference:
1 vote Thank Flag Link Sat May 8, 2010
You may also wish to speak to your lender about the possibility of paying a point on the loan in order to reduce your interest rate if that is a concern. While that will be additional money up front, you may more than make it up in the long run and might be worth it. Just a possible option to look into.

Good luck!

Richard Schulman
Keller Williams Realty
0 votes Thank Flag Link Sat May 8, 2010
I called my realtor today and she encouraged me to speak with another lender. I also contacted my current lender and he said the reason for the 6.25 percent is because we won't be paying PMI and they will be taking off $2000 of the CC. He said he will get me the GFE on Monday.

My biggest concern with the 6.25% IR is that this will require us to pay 10% down which he said may be a possibility. This close to our closing date, I don't like this many unkowns.

His reasoning for the big change was the escrow of our taxes because we don't have 20% down, but he knew that 20 down was never a possiblilty of ours.
0 votes Thank Flag Link Sat May 8, 2010
April, most of the people, will not read you answers below. Well, what is your Realtor talking to you? Any feedback from your Realtor or are you buying new construction direct from the builder?
0 votes Thank Flag Link Sat May 8, 2010
Hello April -

I can't imagine why your closing costs are 3 - 4.5% of your sales price. That sounds outrageous - unless you were paying discount points to buy down your interest rate. But, at 6.25% that doesn't sound like the case, either. Typically, home inspections are not part of the closing costs, but appraisals usually are. Although, every lender quotes their closing costs differently. I agree with Kathy - it only takes a few mintues to create an Initial Fee Breakdown (even if you had to create if from scratch because a computer program was down) or Good Faith Estimate so you know exactly what you are being charged. Switching lenders and closing by June 24th should not be an issue.

I strongly encourage you to shop around and get a second opinion!!

I'm around all weekend if you'd like me to work up some numbers for you. Pre-approvals are done at no cost and no obligation to you. I'm in Appleton, but licensed to do business anywhere in Wisconsin. I've done loans for people as far away as Europe. (Met them when they landed in the US to sign their closing documents!) My cell phone number is 920-915-3242. The web address for a secure, online loan application is Be sure to select Linda Williamson, as we have more than one Linda. :-)
0 votes Thank Flag Link Sat May 8, 2010
It is required that you get a good faith. Here are answers for key quesiton from hund on good faith estimates:
8) Q: The estimate of ―all other settlement charges‖ in the ―Important dates‖ section on the GFE must be available for at least 10 business days. When a GFE is mailed, are the 10 business days measured from when it is mailed?
A: Yes. The estimate of ―all other settlement charges‖ in the ―Important dates‖ section on the GFE must be available for at least 10 business days from when the GFE is provided, which, in this instance, is the date the GFE is placed in the mail to the borrower. The originator should put the date the GFE is provided into the box for ―Date of GFE‖.
9) Q: If state law does not permit a mortgage broker to provide an interest rate, how should the mortgage broker complete the ―Important dates‖ section on the GFE?
A: RESPA and HUD‘s regulations do not exempt any person from complying with consistent laws of any state. HUD's regulations provide a process for addressing questions of consistency between state laws and RESPA. See 24 CFR § 3500.13.
10) Q: If a loan originator offers a ―float-down‖ lock option, how would the loan originator complete the ―Important dates‖ section on the GFE?
A: A ―float-down‖ option should not affect any of the lines in the ―Important dates‖ section on the GFE.

3% are reasonable closing costs which will include appraisal and other prepaid required items, title insurance , loan originatiuon fees and possible points and PMI costs in addition insurance tax escrow for 2 to 4 months.

Keith Manson
First Weber Group
Certified Distressed Property Expert
Metro Milwaukee
0 votes Thank Flag Link Sat May 8, 2010
Met today with our lender. Now he says our closing cost are going to be 4.5%. He couldn't give a good faith estimate because he couldn't get the program to work properly but said that we would get it in the mail in 3 days. Since we cannot afford to pay the 1.5% more than we expected, he suggested we get a conventional fixed loan at 6.25%, and the bank will pick up $2000 of the closing costs. This is a credible bank but this seems a little fishy to me. We paid $450 for our application today but will go elsewhere if we can find a better deal. We are under contract and close June 24th. What are our options?

Banker also told us we couldn't get an arm because we would need to be able to qualify for a 9% APR even though the rate is only 3.5%. This also doesn't seems fishy to me because I thought people got arms because they are easier to get.

0 votes Thank Flag Link Sat May 8, 2010
We are getting a conventional mortgage because we are going to keep our existing home and use it as a rental. This being so, we can only have one FHA at a time so we are going 5% conventional. Our banker in from the metro MN and the home is in WI (border towns). The inspection was complete yesterday and for a 100 year home it went very well.
0 votes Thank Flag Link Sat May 8, 2010
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