Insurance and Taxes

[Jen]

I am looking at buying a Cavalier with 1.5 acres of land for a total loan amount of $126K. The sales agent estimated my insurance and taxes as follows:

$90 for real estate taxes
$55 flood and hazard insurance
$51 for mortgage insurance (PMI)

Do these look too low or too high?

I really want my payment with insurance and taxes to be no more than $900 and right now I am being quoted $1041. My mortage payment is quoted at $844.91. I live in Panama City, FL.

Thanks

[Mark]

Whoa.. don't even think about believing that agent.

You can call your county tax assessor and find out approximately what your taxes would be based on assesed value.
I'd guestimate somewhere around $1100 a year for taxes and $1000 a year for hazzard insurance (dunno about flood, I'm not in a flood zone).
The PMI amount seems high though, probably closer to $40

Or, in other words, an extra $200 over your mortgage payment, plus your PMI of $40 or so..

How much of the purchase price is for the home?
You pay taxes on the land and home, but only pay insurance on the value of the home.

[Jen]

The price of the home + tax is $79,544.70, my land is $32,000.00 and he estimated improvements on the land (well, septice, clearing) to be at $10,000.00 and I am putting 2K down which is making the total package $119,544.70 and then the closing costs bring it to $126,996.80 because I cannot afford to pay closing at this time.

I am irritated because my sales person originally told me someone else was purchasing the same identical house as mine for $62K + tax (which should give me my total payment of $900), but then quoted me $74K and I cannot seem to get a straight answer as to why. I told her she has until Monday afternoon to provide me a detailed reason in writing for why the home went up $12K from what she estimated or I will take my business elsewhere.

[David Oxhandler]

Is it really possable to come up with a total of only 2K for the down pmt and closing costs on a purchase of over 100K. I would like to know more about this finance program.

[Bill Fry]

Your salesperson is underquoting your tax and insurance becasuse he knows that will add about 200+ to your monthly payment.You don't have to escrow this into your payment but its a lot eaiser then coming up with 2200+ at the end of each year.Your dealer sounds a little(lot) shady anyway.Unfortunely theres a lot of ex used car salesmen in this business.

[rmurray]

As odd as it seems..we are doing this type of loan everyday....

FHA...only requires 3% down..and allows the seller to pay up to 6% in closing costs..plus they will advance the FHA insurance fee....then they will allow a charitable nonprofit company to pay the down payment for the consumer...Of course they want a contribution of that 3% and a handling fee from the seller..

All the seller has to do is price the home high enough to pay out these fees..then there is NO cash required to complete this loan...Our dealership does require at least $500 up front to pay for the up front finance fees...but the FHA does not require even this...All this and approvals without consideration of the credit score...They even finance folks CURRENTLY in Chapter 13 bankruptcy and use the bankruptcy payments as a credit reference..Ever wonder why your federal taxes are as high as they are????

This repricing of the home to cover the fees is probably what the price confusion is for this poster...also..most dealers will price in another $3000 to cover the cost of a construction loan so that the consumer has to pay NO cash until the first payment..usually 30 to 60 days after they move in...

Few customers understand that this means they are borrowing tens of thousands more than the selling price...which means with 30 year loans and moderate appreciation the payoff will be upside down for at least 10 years...Hope they found homes that they will like because they will be living in them for a while..

Site built homes are also using this type of finance in a big way...a friend of mine just bought a $250K home with ZERO cash....Takes more up front cash to rent an older manufactured home in Ocala..Right?

[rmurray]

Understand a couple things....

You are looking at the RESPA documents...or loan disclosure forms....these are to inform you of potential fees and charges in your loan...these are NOT a hard quote on your payment...

Every number on the RESPA can be different at the final closing..all the numbers (including the rate) can be higher or lower...there are NO federal penalties for misquoting the RESPA forms...Quality lenders usually actually estimate these fees a little high so that the final payment is a few dollars lower than this quote....BUT...unscrupulous lender will under quote these figures on purpose...

Escrows will be required...they will be exactly 1/12th of the actual insurance and 1/12th of the actual estimated taxes...the figures on the RESPA are only estimates from the national average..example..insurance companies have all different prices..some will be hundreds higher than others..pick the higher insurance and the escrow will be higher...For your area..the insurance escrow numbers you are being quoted sound VERY low....

All you have to do is shop insurance and get quotes...devide by 12 and you will know exactly what your amount will be...taxes are handled about the same..call the tax accessors in your county and ask what the taxes are likely to be..this estimate is the one the attorney at closing will use...The tax part you are being quoted sounds close..but you can check yourself and have a close figure...

The PMI for a FHA loan sounds close...It is usually the most accurate figure on the form..but it is appraisal dependent and is predicated on a certain appraisal..If the appraisal comes in a little lower the PMI will be higher..If the appraisal comes in higher..it could be a little lower..

Pricing on theses kinds of loans can be confusing...Your dealer is building in the closing costs..sales tax..construction loan fees..downpayment assistance...Your sale person or the manager should be able to detail the exact figures to the penny...This is your money..not his..

You have not mentioned the rate of this loan...it should be about 6.25% in this market today..they might quote a little higher just in case rates rise a little during the construction process...sounds like they are quoting about 7 or 7.25...remember 1% interest at this loan amount is about $110 per month..

[Tanya]

Wow, this is an interesting and scary topic. We also qualified for an FHA loan. Luckily for us I guess, we got the financing after we locked in the price of the home, so the dealer couldn't raise the price accordingly, (not that I think they would have, in our case)
But we have to pay 3% down, which we are managing, so the seller won't have to pay any portion of that.
Now I understand the RESPA (?) forms a little better. That those are estimates, and can change. I didn't know how they could come up with those figures ahead of time (eg insurance) Our lender did tell us that they were estimating "high" and that it could come in lower at the end, depending.
I have a question about closing: I understand that it is customary to have an attorney present? How do I go about that? Just call attorneys in the area and ask them if they will accompany us to our closing?

[Renee]

I had a Palm Harbor doublewide and my yearly taxes alone were $1159! I about freaked! We live in a double taxed school district tho. My insurance was $500 a year and that was on a $59,000 dollar home, land not included.

Renee

[rmurray]

Unless you expect to pay cash for the closing costs..they and the cost of a construction loan will be built into the selling price the dealer recieves...If you have been shopping cash prices..the dealer will be adding these costs that are costs of YOUR loan..What did the lender say about closing costs..and who would pay them???

Most mortgages are closed at an attorneys office..or a title company office...This is required by the lender..and the title company or attorney will have to be one they approve (which would be almost all in your area)..It is your attorney..you are paying as part of your closing costs..so it is your right to choose who to use...Most customer have no idea who to use and ask the bank to pick one..which they will..but..it is your choice ..You will close in their office..It is best to choose one who specializes in real estate..You will get better service that way..Since you are paying...you can shop attorneys for price to save money..They are not all the same..

Remeber..title office can give NO legal advice..only file the paperwork..