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Closing costs on $78k home???

Everything I read says closing costs run about 3%. I had an offer accepted on a small home for $78,000 in Twin peaks, Ca. My problem is, between closing and prepaids I am paying over $12,000 out between my down, the sellers contribution and a grant.The GFE increased $1200 on the escrow papers from my original quote. Its an FHA loan and my credit score is only 660. Am I being ripped off by the lender?
  • November 02 2013 - Twin Peaks
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Answers (1)

Profile picture for wetdawgs
Here's a link to Zillow's description of items that may be included in closing costs. While the down payment has to be paid at closing, it is not traditionally calculated within the closing cost percentage.   (FHA loans have 3.5% or greater down payment, so the downpayment alone is > 3%)

Small loans tend to have a higher percentage of costs than larger loans because the some of the costs don't vary with loan size. 

Pre-paids (such as property taxes and insurance) can be highly variable.    Often you have to pay a year in advance (I disagree with Zillow's 2 months comment).

So, you've not given enough information to say whether or not you are being ripped off by the lender.    You didn't mention why the GFE increased (i.e. the categories where costs were increased).  $12,000 seems like a lot, but we've not seen your GFE.

Review the GFE with your lender in detail so you know exactly the meaning of each line and justification.   Proof the HUD statement carefully, every time we've closed we've caught major errors (never in our favor)
  • November 02 2013
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