Please Review this GFE

[Anonymous]

So I went to Bank of America for a 3/1 VA Hybrid ARM loan, as i only plan to live in house for 3 years, and i got this estimate.

Purchase Price -  120,000

VA funding fee - 2.1%

Loa Amount - 122,580

Initial Interest rate - 4.2%

Max Increase  - 1%

Lifetime Max Cap - 5%

P& I - 603

Taxes- 242

Insurance - 50

payment total 895

Discount fee - $ 306

Appraisal - 445

flood cert - 11

other lender/broker fee - 35

 TOTAL Lender fee = 797

Lenders Title insurance - $250

Recording Fee - 40

Survey fee - Free from the bank as said in the contract, its a bank owned, foreclosure

Credit report - free as above in contract

TOTAL /settlement/charger = 290

TOTAL Prepaid -  1660

 ( 20day interest + Insurance + tax reserve )

downpayment - 0  ( VA loan )

Total closing cost - 797 + 290 + 1660 =  2747

Bank is offering 2950 in closing costs as in contract. 

So, is this GFE too good to be true ? 

Charges in my GFE that are ZERO are application fee, processing fee, attorney fee, escrow settlement fee,  and Origination fee ( he said BoA dont charge orignation fee, they get their money from orig. points )

please shed light.

thanks!

[ShanetheMortgageMan]

Since you are only going to live there for 3 years, what is your exit plan at that time?  What state are you buying in? 

It's a pretty fair deal, interest rates on 3/1 ARMs are actually the same or slightly worse than a 5/1 ARM, I'd ask the LO to compare.  Other than the doublespeak by the LO (origination fee & origination points are the same thing), for a 3/1 ARM (and a 5/1 ARM) for a VA loan it's a solid deal. 

[Anonymous]

Thanks for the input. My exit plan is to sell the home after 3 years, i am in the military so i move every couple yeas, so i was only looking for a foreclosed property or short sale, This should appriase over $ 145K  and i got it for 119K   offer accepted. I might try 5/1  if rates are better. I am in TX.

thanks

[ShanetheMortgageMan]

Gotcha.... just keep a backup option in mind in case values are where you couldn't sell without having to bring in your own funds.

[kai_1103]

Many agree inflation is going to rise, and interest rates along with it.  Make SURE you will without a doubt sell it in 3 years. 

My personal opinion is rates are going to shoot up, think 1978, but hopefully not as bad.  I couldn't sleep at night with an ARM!    Just make sure the risk is worth it.