Home Buying in Sharon>Question Details

Joshua A. Tr…, Home Buyer in New Sharon, IA

What on a Good Faith Estimate is negotiable?

Asked by Joshua A. Tremmel, New Sharon, IA Sat Jan 3, 2009

Is it smarter to pay higher closing costs? What exactly is interim interest? And, is PMI necessary or negotiable in any way?

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Hey Joshua... a trio of good questions... Points are usually stated as prepaid interest but it is basically all padding for the brokers commission. You can negotiate most fees except for those mandated by fha. You can work on getting a discount on points, the title company fees, appraisal, processing fees and all teh little fees they add for lots of little things. If you use a trusted and local company, you can avoid alot of unnecessary fees that they will tyry and charge you. simply ask the loan officer to discount them.... good luck
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat Jan 3, 2009
Paying higher closing costs, or points, may or may not be a good idea. It all comes down to timing... if you pay points and don't stay in your home for very long, then it may not be a good idea. You can check this out by comparing your mortgage payment (without PMI, insurance or taxes) with and without the rate reduction that you'll get by paying points.

If your payment with the lower closing costs (no points) is $1500/mo and your payment with the higher closing costs (points) is $1400/mo, then you have $100/mo that you are "saving". If the points cost you $2400 up front for this interest rate reduction, then it will take you 24 months to break even, and after that you'll be receiving the benefit of the $100/month difference. With these assumptions and also assuming that you stay in your home for 5 years, you could save $3600 by paying points up front.

Interim interest is the prorated amount that is due between the time you close escrow and the time your first payment is due. PMI is avoidable with certain loan programs, but if yours is requiring it then the rate is normally not negotiable.
0 votes Thank Flag Link Sat Jan 3, 2009
Your mortgage broker can answer all these questions on your behalf. PMI non negotiable issue, few miscellanous items can be reduced it depends on exactly is on GFE
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sat Jan 3, 2009
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