3 questions about whether I am getting ripped off

[Siph0n]

I am in the process of buying a new build house in queen creek, az. The house costs $149,000 they said they will put $9,400 towards closing costs. This increased the amount of the house to $158,400. Is this common, that instead of the builder paying the $9,400 themselves, they increase the price of the house so I dont have to pay out of pocket for the closing costs? Also, at the bottom of my GFE I see Est pre paid items/reserves : $1,826, Est. Closing Costs : $6,795, PMI, MIP, Funding Fee : $2,675, and Discount (borrower paid) : $972. In the "Items Payable In Connection With Loan" I see Loan Discount and Mortgage Brokers Fee. The Loan Discount use to be 2.25%, but they split it up to be 0.625% for loan discount, and mortgage brokers fee of %1.625. Is that shady?

So to summarize, my three questions are:

1) Is $9,400 in closing costs a lot for a $150,000 house?

2) When the contract says "Seller agrees to pay Buyer's closing costs and/or pre-paid up to but not to exceed $9,400.00" , should they have added that into the cost of the house?

3) Is it shady to seperate the 2.25% into mortgage brokers fee and loan discount fee, to buy down the mortgage rate?

Thanks in advance!!!

[VRI]

A siphon (also spelled syphon) is a continuous tube that allows liquid to drain from a reservoir through an intermediate point that is higher, or lower, than the reservoir, the flow being driven only by the difference in hydrostatic pressure without any need for pumping. It is necessary that the final end of the tube be lower than the liquid surface in the reservoir.

* Just sayin' (smiley here)

* Disclaimer: Sorry, just couldn't resist.

[jamesww]

It use to be very common for the closing costs to be put on the top of the sales price but now I would say you might not be being screwed yet I would expect that you should be able to get them to pay some portion of your closing costs. The total amount in closing costs and prepaids seems a bit high even if you are closing at the begining of the month. 1.625% for the brokers fee is higher than what I would personally pay to have the loan originated but I have seen alot higher. Without knowing your market place I cannot say how good of a price on the home your are getting but I am not all that impressed with your loan option. I don't feel you are getting totally screwed but it does not sound like a great deal to me.

[Wheatworks]

I am in the process of buying a new build house in queen creek, az. The house costs $149,000 they said they will put $9,400 towards closing costs.

8< snip

2) When the contract says "Seller agrees to pay Buyer's closing costs and/or pre-paid up to but not to exceed $9,400.00" , should they have added that into the cost of the house?

If the seller says they'll pay your closing costs up to $9400, I sure wouldn't expect to see $9400 tacked onto the cost of the house.

[AnnAnderson1015]

1) Is $9,400 in closing costs a lot for a $150,000 house?

While this is fairly common, the lender might max you out at 3% seller paid closing cost, so you could run into a problem in underwriting. The exception is when you put 20% down, then the allowable amount is 6%. Check with your mortgage broker because it can get messy if you submit everything in and the underwriter only allow for 3% Seller contributions.

2) When the contract says "Seller agrees to pay Buyer's closing costs and/or pre-paid up to but not to exceed $9,400.00" , should they have added that into the cost of the house?

For a $150k purchase price this seem like a rather large amount. I would consider paying for the closing out of pocket because many mortgage broker think since the seller is paying they can "rape" the borrower.
3) Is it shady to seperate the 2.25% into mortgage brokers fee and loan discount fee, to buy down the mortgage rate?

Without looking at your credit, income, assets I can not be sure. But this does seem a little higher then the norm. I would recommned you shop around with at least 3 different mortgage brokers before deciding which one to use.

I would be more than happy to review your GFE with no strings attach. I don't write loans any longer. PM me

[Business with Greg]

Get a second opinion!