Need some advice please, is this APR & Monthly payment too high for the price of the home?

[Anonymous]

Hi all!

Any advice would be greatly appreciated.  My wife and I are getting an FHA loan, the APR is about 5%, the home price is $195,000, we'll be putting 3.5% down and I was told by our broker our monthly payment will be about $1334.17 including the PMI payment and the $2500 in taxes.  Does that sound too high?  We're first time homebuyers and I'm wondering if anyone can tell me if those figures sound right?

Thanks!

[indecison]

What is your interest rate that they are quoting? APR and interest are different. Also does that payment include your insurance premiums?

[Anonymous]

We aren't locked in yet, but she made this estimate based on an interest rate of 3.375% and the mortgage payment includes all taxes, the PMI & the homeowner's ins. I'm not sure if it's relevant but we're also asking for a 5% sellers assist on the closing costs.  She said with that assistance we would need about $9112 for the closing and the mortgage would be $1334.

[jeffriesde]

Without the full details for closing costs and insurance premiums, I calculated the $195k at 3.375% for 30 years and came up with ~$862/month. Taxes at $2500 per year works out to ~$208/month.

With those numbers you are looking at ~$1070/month.  That leaves you with ~$264 to cover PMI, and Homeowners Insurance.

Sounds right in the balpark to me.  Others may have more detailed information.  Since you are asking for 5% seller assistance, that money just gets added back into your total financed cost.  Add in all of the bank and closing fees and the ammount you borrow could be greater than the $195k.

[indecison]

It would be good to know the details on the fees being charged. Only reason I say this is the APR being near 5% seems a little high especially if the seller is paying 5% towards closing. I am no expert by any means but it would be good to understand what goes into the APR on the deal.

[Anonymous]

Thanks for the replies!

The total closing costs are $12037.77, which doesn't include our downpayment amount of $6825 (3.5%).  She also estimated the homeowner's ins to be 83.33 per month, taxes 208.33 monthly, and PMI 196.02 monthly.  Being first timers, I feel the closing costs are really high but than again I don't know if this is the standard?  Does the closing costs sound about right for living in Phila, PA?

[indecison]

With knowing those numbers I came up with a total payment of $1329.71 so what you have been qouted seems correct. Those closing costs do not seem out of the norm to me.

$195,000 x 3.5% = 6825 = $188,175 + $12037.77 = $200,212.77

Subtract $195,000 x 5% Seller assist = 9750

Total Loan $190,462.77 = $842.03 at 3.375% + $83.33 + $208.33 + $196.02 = $1329.71

Someone correct my Texas math if I am wrong!

[Anonymous]

I basically know nothing about this but by fees do you mean the one time charges at closing?  If so, those are $450 appraisal, $50 credit report, final inspection (if needed) $150, processing fee $550, wire/courier/settlement $200, title ins $1300, notary $105, endorsement $150, title recording/file $830, transfer tax 2% $3900, AUS fee $50, Ellie Mae $100, Realtor Broker Svc fee $300 = $8145 one time costs + the prepaid escrows of $3792.70 (which include HOI/yr 14mo $1166.67, Days interest $17.70, RE taxes 13mo $2708.33)... For the grand total of 12037.70 for closing.. do these feels sound high to you all?

I've been getting a bad feeling about the closing costs amount.  But since we're both clueless when it comes to homebuying costs, I'm not sure if this is truly too much or if it's standard?

[K_J]

I haven't done the math yet, but I could tell you the closing cost is wrong if the seller is paying 5% of the total closing. normally closing cost is 6% and I dont see the reason that amount should be so high.

[indecison]

Geo those fees seem normal from what I see. I think you have nothing to worry about.