Skip to comments.House Buyers Stung
Posted on 08/21/2010 1:16:35 PM PDT by fightinJAG
Just when you thought it was safe to dive into the housing market, a new survey shows mortgage closing costs have skyrocketed an average 37 percent -- with New York topping the surge.
The Bankrate.com survey released this week found that in New York, closing-cost fees hit $5,623, basing the estimate on a $200,000 mortgage for a $250,000 home.
The national average on that same loan was $3,741 -- up from $2,739 last year.
Blame it on regulations designed to rein in the mortgage industry.
As of Jan. 1, lenders were required to make a "good-faith estimate" on a consumer's closing costs -- or risk paying the difference at the final closing.
"They can't lowball you on the estimate anymore," Brian Sullivan, a spokesman for the Department of Housing and Urban Development, told the San Francisco Chronicle this week.
Lenders also have to comply with tough new rules and underwriting standards and a new appraisal process, he said.
New Yorkers pay even more because of extra paperwork, the higher cost of living and extra fees -- including those charged by lawyers, said Timothy Dwyer of Entitle Direct Group, explaining that in New York, a homeowner pays for the cost of the lender's lawyer at closing.
(Excerpt) Read more at nypost.com ...
I wonder why a “good faith estimate” costs an average 37% more . . . .
Good Faith Estimates are now a joke. They will say the closing costs are from $3,000 to $25,000, making each line item as much of a wild swing as the final estimate. “Documentation Fees: $250-$4,000. Transaction Fee: $25-$1,780. etc”
Mortgages are criminal acts of enslavement (like credit cards) unlike a conventional consumer loan
Hate to say I told you so. But I did, repeatedly. The bomb is still ticking and wild insanity is just beginning. The full blown tsunami is coming.
LOL, LOL !
Home Prices Are Approaching Garbage Rental Rates
Here’s a place where govt. regulation actually could be a benefit to the consumer. But, Congress usually makes govt. regulations that are only a benefit to themselves, so I hold out no hope.
Concerning other types of loans, these fees are being assessed everywhere. We need to refinance our business, and we are finding special fees being charged everywhere we look.
And then what?
Also, now appraisers actually have to appraise the house rather than merely checking on Google maps satellite view just to make sure that there was a house there at some time. Real appraisals cost more.
Ive never understood closing costs. It seems something restricted to real estate. Why should the lender be paid extra to process the loan? A title company? None are involved when we transfer a car title. Does the average home need to be surveyed every time its sold?
It seems like a scam to me.
Good. It is time to bury the myth that home ownership is the “American dream”, and either end the mortgage deduction or institute a renter’s deduction. Government needs to stop distorting the proper function of the markets. Some people are NEVER meant to own a home.
The True Unemployment Rate is Over 20%
You are a very smart guy. Read between the lines . . .
I have been a mortgage banker for 18 years. The new GFE is not a joke. Line item fees to the lender have a tolerance of 0.00% and other closing costs paid to others such as the appraiser, attorney, title insurance, recording etc have a tolerance of 10.00%. If the actual closing costs exceed the stated tolerances the customer recieves a lender credit for the difference at closing.
What is accurate about the article is the amount of research, documentation and due diligence that is required of lenders is expensive, but required for loans to be sold and serviced by the secondary market. Those new costs are going to be paid by the consumer. The technology and the labor required are not free. Welcome to hope and change!
“the amount of research, documentation and due diligence that is required of lenders is expensive”
No, it is not. You’re talking to a guy that has created computer systems for the mortgage industry and I understand the process extremely well. The amount of bullshit in the industry is amazing. Everyone has their hand in the pie but few add any value to it. I can buy a $50,000 truck right now within the hour and drive it home, but to buy a $50,000 property that I cannot move takes nearly an act of God and thousands of dollars in “fees”. The ONLY people that add any real value and do any real work are the title companies. The rest simply process unnecessary paperwork and want to be paid a kings ransom for it.
And even that's questionable: make the title on file with the town the official one and require all leinholders to file notice with the town, and the need for a title search goes away.
Is an “FSBO” sale still a viable option?
Last time I refinanced with my existing mortgage company, it cost me $300. This time, because of Obama and the Democrats, it’s going to cost me at least $1500. Stupid democrats. Always making us pay more for less.
That chart suggest we are back to normal. It was odd that ownership got so far above rental costs.
because you have law firms forensicly going through closing papers for defects and removing the morthgage from the property. This makes the promissory note unsecured.
Title companies also have to check deeds; mineral, water, etc. Usually that isn’t a big problem, but the databases for it are rather cumbersome. But, as you said, it really ought to be a county records issue. Each plot should have a file and all records put there.
Mortgage rates recently fell to 4.25% for a 15 year loan. I went in to investigate the benefit of refinancing. I asked what closing costs would be, since the advertised rate was “no points, no fees”.
The bank loan officer called their finance arm, asked for closing costs, who estimated north of $3,200 to refinance my $16,000 loan.
While I was there, I asked about refinancing my $30,000 car loan. She said there were no fees. All I needed was a $15 fee to California DMV.
I grilled her on the fact that my car loan would be free but they wanted $3,200 to re-run a stinking loan on a home I ALREADY OWNED. They had a schedule of fees included sitting on the desk, and when I added them up it came to around $1,500. I’m sure their costs have risen since the sheet was printed and laminated, but still, we are talking about $1,500 in PROFIT just for writing a new note.
This was not a new house purchase. Just a refinance. An appraisal and new loan is all I should need, a couple of hundred in fees at the very very most.
I told them to shove it.
I went home and did the math and found that that my break even point was at about 7 years.
The bottom line: they would make as much money off fees for my refinancing as I was going to save.
They can go to hell. As far as I am concerned, they won’t see a penny from me unless rates go to 3% AND I can negotiate a low closing cost. I’ll pay off the house on accelerated payments and make sure they make the least off me.
I am STILL FURIOUS that they would steal half my savings just for rewriting the note on a home I already own and have only had 2 years.
They are a good Savings & Loan and I am very happy with them, but they lost a fee paying customer with their greed. Screw em.