GFE Feedback appreciated

[Phitor]

Base information:

$425,000 : Purchase price
$373,000 : Loan amount
3.875%, 30 year fixed

"No" to the five questions about rate increases, balloon payments, etc.

$2032.50 : Origination Charge
$380     : Appraisal Fee
$28.60   : Credit Report
$82.00   : Tax Service Fee
$14.00   : Flood Certification

$2181    : Title services and lender's title insurance
$244     : Owner's title insurance
$250     : Government recording charges
$3942.74 : Initial deposit in your escrow account to be used for property tax and PMI
$602.24  : Daily interest charges (gap before first mortgage payment)

I didn't really know what to expect, but the only thing that really pops out at me is the initial deposit they are requiring into escrow. This is an additional $4k that I need for closing. Is this normal, or negotiable?

Thanks for any feedback on anything I can negotiate or push back on...

[Catacam]

It all looks good to me, and yes, that amount is correct. They collect your money for escrow upfront, and you will have to pay that depending on what closing costs the sellers are paying, or what other credits you may have. Congrats!!

[my25reasons]

Your daily interest charge stands out to me. Mine was $7/day. I'm not sure if that amount is per day or for the majority of a month.

Everything else looks good. Escrow amounts are normal and non-negotiable. Those amounts are what you will be expected to pay in taxes and insurance for the next year. You pay those to escrow a year in advance so that the funds are there each month.

[StartingOver10]

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@Phitor wrote:

Base information:

$425,000 : Purchase price
$373,000 : Loan amount
3.875%, 30 year fixed

"No" to the five questions about rate increases, balloon payments, etc.

$2032.50 : Origination Charge
$380     : Appraisal Fee
$28.60   : Credit Report
$82.00   : Tax Service Fee
$14.00   : Flood Certification

$2181    : Title services and lender's title insurance
$244     : Owner's title insurance
$250     : Government recording charges
$3942.74 : Initial deposit in your escrow account to be used for property tax and PMI
$602.24  : Daily interest charges (gap before first mortgage payment)

I didn't really know what to expect, but the only thing that really pops out at me is the initial deposit they are requiring into escrow. This is an additional $4k that I need for closing. Is this normal, or negotiable?

Thanks for any feedback on anything I can negotiate or push back on...

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There are a couple of items that might help. First, the seller is responsible for the real estate taxes from Jan 1 to the closing date. So, as far as your escrow is concerned, if your county bills and collects taxes in arrears at the end of the year like mine does, then your seller is responsible for contributing to your escrow for the time they owned the property from Jan 1 to the closing date. That amount is pro-rated and collected at closing and given as a credit to you. Then in Nov 2012 when the 2012 real estate taxes are due, you pay the entire tax bill out of your escrow. Really your bank pays it, but it comes from your escrow. If the actual taxes are higher than what the title co/attorney estimated, you go back to the seller (or contact your agent for help) to have it re-prorated. Naturally, this only applies in the closing year.

As to the per-diem interest, it looks like you totaled the entire amount as a $373k loan wouldn't normally generate $600/day in interest. This figure is directly dependent upon the date you choose to close. It is a per-diem rate collected just for the month of closing. You skip the next months payment (for example if you close on May 15th, you have 16 days of interest due. You skip June 1st payment and your first payment is due the first of July.

As to the title insurance: that may be your opportunity to negotiate. The lender is giving you an estimate only.  Look in your purchase contract to see who is responsible to pay for title insurance and settlement fees. In our contracts here, the person that pays also gets to choose the title co/attorney for closing.  If you are the one that is responsible for paying it per your contract, then get with your Realtor to find out who is good in your area and shop their rates. Generally the title insurance itself is at promulgated rates, but the settlement fees the title co charges are vastly different and they are negotiable. You have to deal directly with the title company to negotiate their settlement fees (in your post they are labeled as title services). Some will, some won't. Overall your fees appear very reasonable.  

[Phitor]

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@my25reasons wrote:

Your daily interest charge stands out to me. Mine was $7/day. I'm not sure if that amount is per day or for the majority of a month.

Everything else looks good. Escrow amounts are normal and non-negotiable. Those amounts are what you will be expected to pay in taxes and insurance for the next year. You pay those to escrow a year in advance so that the funds are there each month.

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Thanks, my daily interest is listed at $40/day for 15 days, I'm assuming because I close in the middle of a month. Based on my loan amount and my rate, my amortization table was showing that I would be paying $1200/month in interest right out of the gate, gradually falling over time. So $600 for 15 days seemed in line with this. It may seem high, but at least it was mathematically explainable. What were the specifics of your $7/day?

As for the escrow prepayment, can I then count on lower monthly payments to start, as I am prepaying almost 6 months of property tax and PMI?

[StartingOver10]

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@Phitor wrote:

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@my25reasons wrote:

Your daily interest charge stands out to me. Mine was $7/day. I'm not sure if that amount is per day or for the majority of a month.

Everything else looks good. Escrow amounts are normal and non-negotiable. Those amounts are what you will be expected to pay in taxes and insurance for the next year. You pay those to escrow a year in advance so that the funds are there each month.

---

Thanks, my daily interest is listed at $40/day for 15 days, I'm assuming because I close in the middle of a month. Based on my loan amount and my rate, my amortization table was showing that I would be paying $1200/month in interest right out of the gate, gradually falling over time. So $600 for 15 days seemed in line with this. It may seem high, but at least it was mathematically explainable. What were the specifics of your $7/day?

As for the escrow prepayment, can I then count on lower monthly payments to start, as I am prepaying almost 6 months of property tax and PMI?

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No. The MI is paid by you monthly and is a pre-paid expense.  The 6 months of property taxes are paid so when the tax bill is due in Nov 2012 there will be enough in the escrow account to pay in full with an apprx 2 mth cushion. You won't contribute to your escrow the first month because no payment is due from you the first month.

Every year you servicer will analyze your escrow account and refund you any overages you have over and above the allowed amount. (Its a formula that essentially allows a max cushion of approx 2 months).  If you are short, then you will be billed and your escrow payments adjusted. if you have paid in too much, then the escrow payment will be reduced. This is ongoing because your taxes and insurance change annually but the analysis is done only one time per year, usually in Jan for the previous years payments. The servicer will send you a written analysis with the data so you have a chance to review and contest if necessary.

[my25reasons]

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Thanks, my daily interest is listed at $40/day for 15 days, I'm assuming because I close in the middle of a month. Based on my loan amount and my rate, my amortization table was showing that I would be paying $1200/month in interest right out of the gate, gradually falling over time. So $600 for 15 days seemed in line with this. It may seem high, but at least it was mathematically explainable. What were the specifics of your $7/day?

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That makes more sense. My loan amount was almost 1/3 of yours, so my daily interest would be significantly less. $40/day looks accurate.

Also, my final paper work did vary from my GFE, but a rule of thumb is that it should not change by more than 10%. My closing costs actually decreased by 6%. Though I didn't get the final numbers until the day before closing.

[Phitor]

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@StartingOver10 wrote:

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@Phitor wrote:

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@my25reasons wrote:

Your daily interest charge stands out to me. Mine was $7/day. I'm not sure if that amount is per day or for the majority of a month.

Everything else looks good. Escrow amounts are normal and non-negotiable. Those amounts are what you will be expected to pay in taxes and insurance for the next year. You pay those to escrow a year in advance so that the funds are there each month.

---

Thanks, my daily interest is listed at $40/day for 15 days, I'm assuming because I close in the middle of a month. Based on my loan amount and my rate, my amortization table was showing that I would be paying $1200/month in interest right out of the gate, gradually falling over time. So $600 for 15 days seemed in line with this. It may seem high, but at least it was mathematically explainable. What were the specifics of your $7/day?

As for the escrow prepayment, can I then count on lower monthly payments to start, as I am prepaying almost 6 months of property tax and PMI?

---

No. The MI is paid by you monthly and is a pre-paid expense.  The 6 months of property taxes are paid so when the tax bill is due in Nov 2012 there will be enough in the escrow account to pay in full with an apprx 2 mth cushion. You won't contribute to your escrow the first month because no payment is due from you the first month.

Every year you servicer will analyze your escrow account and refund you any overages you have over and above the allowed amount. (Its a formula that essentially allows a max cushion of approx 2 months).  If you are short, then you will be billed and your escrow payments adjusted. if you have paid in too much, then the escrow payment will be reduced. This is ongoing because your taxes and insurance change annually but the analysis is done only one time per year, usually in Jan for the previous years payments. The servicer will send you a written analysis with the data so you have a chance to review and contest if necessary.

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Thanks for the explanation. Still seems very odd, accounting wise, to prepay almost 6 months of property tax into escrow, then pay monthly property tax on top of that. Obviously come escrow settlement time, there is going to be a massive surplus in the escrow account. I underatand tax amounts fluxuate, but normally by 1-3% only. This isn't black magick, this is a modelable scenario.

If they want a 2 month buffer, then that's fine, have me prepay 2 months and contribute monthly. Or have me prepay for the rest of the year, and not contribute monthly. But incurring both expenses up front, only to imminently get a predicatable amount back at some point in the future, seems like a scam to borrow money from me interest-free, frankly. I realize I have no choice, still irritating...

I looked into the title issue... my lender is allowing me to use my own title attorney if I want. They have a requirement to use their own selected attorneys for other closing issues, though.