closing cost too high?

[vicki]

We are looking at buying a new modular home to put our land. We have started the financing process and when we got the truth and lending statement they are trying to charge us $20,000 in closing (settlement) charges on a $120,000 loan. This doesn't seem right. What is the usual charge on a construction loan?

[Mac]

That sounds high to me. Would you mind itemizing what the fees are for? Then we can have a look.

[vicki]

This is how it is worded on the good faith estimate...
ITEMS PAYABLE IN CONNECTION WITH LOAN
$1412.73 loan origination fee, $450.00 appraisal, $50.00 credit report, $200.00 lenders inspection fee, $350.00 processing fees, $225.00 underwriting fee, $15.00 wire transfer, $2600.00 construction administration fee, 250.00 modification fee, $23.00 flood certification, $1200.00 survey
TITLE CHARGES....
$652.00 extended lock fee, $450.00 closing fee, $100.00 attorney fee, $1412.00 title ins., $10.00 tax cert., $317.95 endorsements, $2.00 guaranty fee
GOVERNMENT RECORDING....$440.00 recording fees
ADDITIONAL SETTLEMENT CHARGES...
$100.00 MHU processing, $125.00 copies, Fed Ex, accting fees, $205.00 TDHCA,

The rest I understand...Items Lender to be paid in advance
Interest for 28 days $731.52, hazard ins. $1125.12,
Reserve deposited w/ lender.....hazard ins. prem. 3 mon. $281.28, Taxes and Assessment Reserves 7 mon. $1241.24.

Our Modular price is $90,000.00, we are estimating $40,000.00 for improvements, and putting $10,000.00 down (the mod. will be put on our land valued at $52000.00). And with their fuzzy math our loan amount will be $141,273.00.

It also says the seller will pay $10634.19.

[Mac]

I see a lot of BS fees in there. Make them explain, one by one, what those fees cover, why they are not covered in the origination fee (which is what they charge to do business with you). Also, get another quote. If it were me, I would want to see everything that says "fee" removed except the origination fee. You are paying all those fees because they think they can get you to do it - typical of unethical brokers. What is a $2600 " construction administration fee?" You already pay a higher rate on a construction loan.

Personally, I'd find someone else - you're being taken - especially since the mortgage business is slowing down now and these guys are hurting for business.

Google the Mortgage Professor - Jack Guttentag's column/website - and have a closer look at what you ought to be paying.

Go get 'em!!! Mac

[rmurray]

Ouch....On a 1 time close loan....It is not unusual for closing costs to total abuot 7% of the amount of the loan...If construction interest is added in (so you do not have to pay any payments during constructio you should expect about 5% more for up to 6 months..The $2600 consruction admin fee seems VERY high...Some of these fees are state taxes...Such as TDHCA..recording fees, Some states allow you tro shop many of the services..such as appraisal, attorney or closing agent, hazard insurance, survey and even title insurance...All would have to be with lender approved companies...but you can shop the market for the best price...I would shop these as much as you did for the home..Some how the dealer has you putting down $10,634.79....

[jbrady]

Your loan is full of "junk fees" the industry is full of official sounding fees that nobody questions, The loan "origination Fee" is pure profit. Does sears charge you a fee to do business with them? The Grocery store? the power company? They are taking advantage of you because they can. If you let them----JBrady

[kirkdavison]

Loan origination fee is pure profit but what buisness does not opperat at a profit? Including my loan origination fee and other chages on a one time close my costs come in at about 6% of the loan amount. On her 120,000 amount this would be about 7200

[2sweetcats]

I AM PAYING CASH FOR A USED MANUFACTURED HOME (BET. $20-40K). WHAT KIND OF CLOSING COSTS ARE INVOLVED?

[David Oxhandler]

Most buyers are unaware about what takes place after they have found their dream home. Most buyers are happy to let their local real estate professional handle all the details with handy referrals. Indeed, this can often prove the most useful because that realtor or local professional will have established connections that will most likely adhere to local laws and regulations governing transactions. Even so, because so much is riding on what amounts to the largest transaction a buyer may ever make, it is often good to have a basic awareness of these details in order to help ensure nothing gets dropped.

Read the free article Escrow & the Home Buying Process for details

[rmurray]

If you are buying from a dealer..You will have sales tax, tags, title fees...

From a individual there still will be title fees and tag fees( some states still collect sales tax on private sales)...You should also consider a closing attorney to protect you from liens (loans,judgments, local and federal tax liens) on the home and or property..They will cost about $300...A small fee in relation to the possibility of you losing ALL your money...