1). Your Realtor & Loan Officer are Great Resources - Both should be able to provide you with an accurate estimate of the closing costs that you are likely to pay for the purchase price and financing terms you have providedâ€¦in fact, once you have provided some basic personal information along with the property address and sales price, your loan officer is required to provide you with a Good Faith Estimate within 3 business days.
2). Fees and Closing Costs Stated on GFEâ€™s MAY NOT Accurately Reflect your Actual Closing Costs - GFEâ€™s these days will tend to be over-estimated by the loan officer providing them since the loan officers may be liable for covering any fees that are understated. This being said, in many instances the GFEâ€™s provided DO NOT take into account the customary allocation of closing costs for individual counties.
3). Are You Receiving Any Credits? - Your final closing costs MAY be further offset by credits provided to you by other parties to the transaction (your lender, your real estate agent, or the seller), so the initial estimates provide may not accurately reflect your net closing costs.
4). When in Doubt, Ask Questions - Review the GFEâ€™s received with both your loan officer and your real estate agent. Both should be available and knowledgeable enough to assist you with your questions about closing costs. If there additional title and escrow questions then forward these concerns to the escrow officer if youâ€™re already under contract.
Real Estate & Lending professionals can provide accurate estimates of the possible closing costs you may incur through a financed purchase transaction, but fees can change depending on the finalized purchase agreement and based on the final interest rate chosen for your loan documents. But keep in mind, the intent of providing estimated settlement costs these days is to inform Buyers of ALL possible charges that MAY be incurred through the purchase and financing of real estate.
Much of my answer depends on where you are in the buying process. The amounts showing on the GFE are estimates which may change based on the date you actually close. They are generally a bit high to make sure you have enough money to close. The rate sounds about right but I would be more concerned with the 7/1 ARM especially if youâ€™re putting 20% down. If you have not submitted an offer to purchase the home, I would suggest getting a second opinion on the loan term. With my buyers I suggest they first contact the bank or credit union they have a relationship with. If youâ€™re not sure about the rate and term, I suggest contacting another lender to get a second opinion. It takes a little more time but weâ€™re talking about more than half a million dollars of your money. In todayâ€™s market a 30 fixed should be the first quote you receive. Unless you completely understand the implications of getting an Adjustable Rate Mortgage â€“ Do Not Do It!!
That being said, if you are already in contract, you have time constraints to consider. I would still check another lender. You may find one that may be able to honor the contingency dates. You should know you are not obligated to take a loan until you sign the final loan documents. Understand if you change lenders in the middle of the process you may owe addition credit report and appraisal fees. Bottom line, if you are not happy, talk to your lender and real estate agent.
They should have your best interests at heart.
Feel free to contact me if you would like more information.
I did receive a GFE but it looks too high to me (excluding the points buying); almost 3% in San Jose city.
Also, the rate being offered is 3.75% for 7/1 ARM with 20% down. Is this reasonable?
My credit score is around 720.
Also lender has asked me to pay few credit cards.
What my colleagues have said about getting a net sheet still applies.
Pacific Century Realty
Buyer Rebates to 50%
Listing Commissions as Low as 1%
If you are working with a lender or Realtor and, they have not provided this information to you, slap them now.
A person with a lender or Realtor who does not provide this data, needs to be replaced by someone who works within basic ethical standards and who believes integrity is important.
Give me a call, I would be honored to help you.
408 348 4026
As another agent mentioned, a net sheet can tell you how much your closing costs are estimated. This estimate is close to your actual one and any agent should know how to do it.
San Jose Realtor
Ceritfied Short Sale Specialist
408 379 2001
Your lender will determine what is required on your loan, prepaid reserves and loan fees, the day of closing affects what property tax pro-rations will be, what you negotiated in the contract, etc. Since your property is in the city of San Jose, and IF you negotiated the standard and customary split of fees, you will pay for title insurance and split the city property transfer tax 50%/50% which is $3.30 per $1000 of property value, or the contract sale price of $525,000.
You can use 2% as a ball park, but please don't rely on it. Your lender calls the shots. They are looking at debt to income, and I've seen them require a credit card to be paid off as a condition.
Congratulations on your purchase and enjoy your new home.
Estimate of 2% of sales price is about right.
However, variables include cost of appraisal, cost of credit report (some lenders will credit these back), cost of buying down any points, processing fees, cost of longer lock periods. Looks at the good faith estimate for a more detailed cost but is only provided once a contract on a home is written/accepted. Your loan officer should be able to give you basic fees ahead of a purchase but these might vary once the the actual purchase is made.
See this web site for more help