First time home buyer - 30 year Fixed

I am pretty sure you don't get a Good Faith Estimate until the offer is accepted, because there is essentially nothing to estimate right now.

Quote from tiedyed1 : Meadowlands, In respect to what nonlnear was mentioning, it has to do with a rate credit instead of a cost (or zero points). A higher rate would provide you a higher rate credit to further offset costs. In your case, at 95% LTV, a rate of 3.75% would not provide a rate credit as that higher LTV does incur pricing adjustments (add ons). I think you have the gist of it but the figures are probably not exactly what you are thinking. Just so you can more accurately understand how they are structuring it, and something you should confirm, it sounds like they are increasing the selling price to incorporate a seller's concession towards your closing costs and you will be borrowing 95% of that higher figure. Instead of 175,000 the sales price will be $180,250 w/ a $5250 seller's concession towards your closing costs. The loan amount will be 95% of $180,250; You will put down 5%, $9013 and have a loan amount of 171,237 I am then guessing they quoted you about $7000 in costs of which $5250 will be covered by the seller's concession and that leaves the other $1750. The only other things I want to mention is: a) definitely review the Good faith Estimate to make sure there aren't any junk fees. b) be aware that you will need additional monies for prepaid expenses (homeowners insurance premium, establishing tax and insurance escrows, and any prepaid interest for the month you close) -Adam

Hi Adam,

According to the manager at weichert, everything is built into that number, including the pmi, first 5 months of taxes attorney fees and insurance. I have some papers to sign in order to submit the offer however I am still shopping rates. Any other info is appreciated! Thank you.

Quote from Meadowlands : Hi Adam, According to the manager at weichert, everything is built into that number, including the pmi, first 5 months of taxes attorney fees and insurance. I have some papers to sign in order to submit the offer however I am still shopping rates. Any other info is appreciated! Thank you.

Sounds like he is probably blowing smoke, taxes alone would be roughly $1.5 - 2k. tiedyed1 gives a lot of good info and has helped many a member here. I also have a good person to use that I have used several times and have referred several other members to use. Feel free to PM me and I can send the contact info.

I know in the past, $500 was a normal good faith deposit, and even if you don't have a valid contract any lender can give you a Good Faith Estimate (GFE). Your actual costs might be different as they are only good for an hour. Even after you have a valid contract, until you get a lock agreement, the GFE means nothing.

I am in NJ (w/ my company is licensed in 12 States) and most Realtors I know here do write their offers with $1000 deposits these days.

It is always suggested that you consult a mortgage professional asap and Good Faith Estimate should be readily available once you have a scenario, which you do. One thing that is unacceptable in my business is surprises; and I make every effort to disclose everything, including discretionary items that you may or may not need. (For example, are you going to have a home inspection? Do you need a new survey? What about a termite report?)

I suggest you focus on the offer with your Realtor; and present it with the seller's concession structuring as they have outlined. (Keep in mind that a seller's concession scenario obviously requires the property to appraise for the higher selling price. In this case it sounds like it will, but just wanted to mention that.) Make sure your offer includes a reasonable mortgage contingency, which provides you time to obtain a mortgage commitment. (A relatively clean one too and not one conditional on a slew of items.)

Then, as a completely separate matter address your financing. Obviously Weichert wants to get your financing business too, but try not to get the two matters comingled too much. If they are completely transparent (i.e. no surprises) and you like the terms, great. Otherwise, you know you have alternatives that can provide you the comfort level you desire. Rates are posted daily and constantly change along with the Mortgage Backed Securities (MBS). Plus rate locks have different terms as well. As discostu58 states very accurately, everything being batted around right now means notyhing without a GFE and rate lock.

-Adam

Quote from tiedyed1 : I think you have the gist of it but the figures are probably not exactly what you are thinking. Just so you can more accurately understand how they are structuring it, and something you should confirm, it sounds like they are increasing the selling price to incorporate a seller's concession towards your closing costs and you will be borrowing 95% of that higher figure. Instead of 175,000 the sales price will be $180,250 w/ a $5250 seller's concession towards your closing costs. The loan amount will be 95% of $180,250; You will put down 5%, $9013 and have a loan amount of 171,237

That sounds likely, but I'd like to hear him confirm that. I don't know about the NJ FTHB program, but if they do allow negative equity I'd be concerned that this might not be the greatest deal (always, assuming his credit is good). If it is an increased selling price with a seller's concession that would at least give him a tiny bit more equity, which could help give him more refi options sooner down the road. The way I was reading it (closer to verbatim), it sounded like he was going to start out 3% upside down. I know there are a handful of subsidized programs out there that still allow that so I didn't consider that it might be a little more "conventional".

One question that really matters here is the borrower's credit. If it's not stellar then it's a good bet that the subsidized program is about the best deal he's going to get. If it is excellent (>700-750 depending on the lender AFAIK, but I haven't shopped in a while) then it's especially worth shopping subsidized and unsubsidized programs - even if the down payment isn't all that big.

Hey guys,

My credit is excellent, I have scores of 772 - 782 and 790. The numbers that tiedyed1 quoted are spot on to what the guy at Weichert quoted me. I spoke to him earlier this evening and he again told me that everything is included in that $7000, such as attorney, PMI, Insurance, inspections, 5 months of taxes etc.

Obviously he could be blowing smoke but I went to penfed and they quoted me $5,648 in closing costs which does not include the axes, PMI or attorney.

they also had a 3.75% rate which is what weichert is giving me too. My cousin who is a realtor went through a few things but there is so much information, it is like me telling someone what they need to build a computer and they know nothing about computers. I did not know the OS cost $200! type of thing. oh and if you want Word that is another $150 and a good graphics card is about $350...if you get what I mean.

I hope I didn't come off as too negative about the Weichert loan. The more details you post about it, the closer to good it sounds.

I'm personally not a fan of prepaid PMI, because I leave room in my monthly budget to get it out of the way early even if I don't have the biggest down payment. If I reduce the risk exposure of the insurer, I want to pay less in premiums, not let them walk away with it as a prepaid lump sum. (AFAIK. PMI premiums are not "earned" - i.e. if the policy is cancelled early you are not entitled to a prorated return of premiums like auto and home insurance. Don't quote me on that though.)

This whole PMI quibble really isn't necessarily something you should get hung up about - it's just my personal quirk. Then again it doesn't hurt to ask if PMI has to be prepaid - especially if you anticipate being able to get to 22% equity faster than scheduled.

The MI options these days can indeed be mentally staggering. As MI is no longer tax deductible for those with <100k annual income (that expired 12/31/11) more lenders are now offering Lender Paid MI which they incorporate into a higher rate (where the interest is tax deductible for now). But each case is different (depending on how long you will have this loan for) and you have to do the math; but in some cases where the borrower does not want to part with that lump sum it is also a sound option.

In this case Meadowlands is looking at approx. $3750 in one single up front MI payment.
Just my opinion, but before someone dishes out that lump sum, they should also be aware of Lender Paid MI options, where in this case they would be looking at an adjustment of .375% to the rate.
In this scenario that equates to approx. $37/mo increased payment in interest (tax deductible remember, so effectively costing you less). It would take almost 8-1/2 years of paying the extra interest to cover that initial lump sum.

Human nature gets fixated on the rate, but the big picture is what really matters.
In this case some may opt for the LPMI w/ higher rate and holding that $3750 to fix up their new house.

It is definitely confusing, as each individuals scenario is truly unique.

Since I have a loan at penfed, I called them and their closing costs were $5,600. I am assuming this did not include attorney fees or taxes. Seemed pretty high for Penfed...

Meadowlands, I am also not sure if they have both a seller's concession plus adding the single up front MI premium of $3750 to your loan amount.
Many variables and options.

You really are spinning your wheels until you see a written Good Faith Estimate.
Based on todays pricing, with a rate of 3.75% your costs (closing costs, not including prepaid expenses) will be in the area you were quoted ($5500 +/-).
With a rate of 4.00% those costs will be in the $3100 area.
It just depends on how you want to structure it.

Feel free to contact me if you want my figures (that can be delivered).

-Adam

Quote from Meadowlands : Since I have a loan at penfed, I called them and their closing costs were $5,600. I am assuming this did not include attorney fees or taxes. Seemed pretty high for Penfed...

Penfed is hit or miss. When they are running one of their good specials their mortgages are amazing, but sometimes they are squarely in the middle of the pack.

Quote from tiedyed1 : Meadowlands, I am also not sure if they have both a seller's concession plus adding the single up front MI premium of $3750 to your loan amount. Many variables and options. You really are spinning your wheels until you see a written Good Faith Estimate. Based on todays pricing, with a rate of 3.75% your costs (closing costs, not including prepaid expenses) will be in the area you were quoted ($5500 +/-). With a rate of 4.00% those costs will be in the $3100 area. It just depends on how you want to structure it. Feel free to contact me if you want my figures (that can be delivered). -Adam

Hi Adam,

Got tied up with work today but have free time tomorrow morning. I will reach out to you with all of the figures. I had to send out the paperwork to make the offer and I also asked for a gfe. Hoping to hear back tonight. Thanks for the help!

My pleasure. Speak to you soon. Hope the offer is accepted!

Quote from Meadowlands : Hi Adam, Got tied up with work today but have free time tomorrow morning. I will reach out to you with all of the figures. I had to send out the paperwork to make the offer and I also asked for a gfe. Hoping to hear back tonight. Thanks for the help!

The costs you're getting quoted, seem pretty darn high to me.

Check out www.amerisave.com, others have recommended www.provident.com but I don't know if they would lend with your criteria.

Even with using your #'s I see 3.75% under $3k in closing costs at amerisave.

Additionally I would suggest you seriously consider taking a higher rate to offset the closing costs.

For example a 4% with them costs negative $500. That $3,500 in up front savings would take 130+ months to break even on (as at 4% you're paying $26 more a month) but most people don't stay in their first house for 10+ years!!!