Posted on 01/31/2008 7:20:47 AM PST by 4everontheRight
Advice needed - from mortgage brokers to those who have done it themselves
INTEREST RATE 5.250%
POINTS 2.345%
APR 5.536%
CLOSING COSTS 5,919
INTEREST RATE 5.875%
POINTS 0.016%
APR 5.950%
CLOSING COSTS $ 2,193
Am I loony or are those Closing costs kind of high???
Before closing on my house back in ‘94, the title search turned up a lien which had not been uncovered by whatever title outfit had been used by the seller when they bought the house 5 or 6 years prior. That lien had to be satisfied somehow, but I never learned whether the title company that missed it in the first place made it good.
The interest rate is the note rate of the amount borrowed - just simply interest on that loan.
The APR is a rather convoluted, but generally accurate, way of determining the total finance charges of the loan which is interest rate PLUS closing fees. It’s usually higher, sometimes identical to, but never lower than, the note interest rate.
What is the loan amount? That seems pretty typical to me but it depends on loan size and where you live.
Title Insurance Pricing, Kickbacks Criticized on Capitol Hill
Federal law prohibits realty settlement kickbacks or provision of "anything of value" in exchange for referrals of consumer business. Cunningham also hinted at future title industry-related crackdowns that may be in the works. In one case, he said, a home builder allegedly required purchasers to use a particular title insurance company -- a violation of the federal real estate settlement law (RESPA) in itself -- but then pocketed substantial fees kicked back from the title insurer and paid to the builder's in-house title company affiliate.
A consumer group representative, J.Robert Hunter of the Consumer Federation of America, broadened the focus of the hearing to the huge revenues paid by home purchasers and refinancers compared with the minuscule claims paid out by title insurers. Hunter, a former Federal Insurance Administrator, said consumers spent $17 billion on title premiums last year -- twice what they paid in 2000 and four times what they spent in 1995.
http://www.naic.org/topics/topic_title_insurance.htm
Recent investigations by the states have revealed that there is a lack of competition for title insurance and that some title insurers and other groups engaged in the settlement business have committed fraud. The fraud has occurred through blatant conflict of interest, kickbacks to realtors, lenders, and homebuilders, and by setting up a captive reinsurance arrangement as a means of transferring premiums to various groups in exchange for referrals. The NAIC and state insurance departments, working with state Attorneys General, have investigated the title insurance business and prosecuted several title insurers for this practice. The states have reached settlements totaling nearly $50 million with title insurance entities found to have violated state and federal law prohibiting kickbacks.
Title insurance's dark underbelly told in Congresshttp
://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2006/05/07/REG49IL90R1.DTL
Do those costs specify a loan amount?
Yes. Honestly a regular life insurance policy for the amount of the loan plus whatever else you’d want is more economical.
She also said that it is possible for something unrecorded or improperly recorded to show up later and the Title company is not responsible assuming they did that minimal search. Said it rarely happened but in the few cases she remembered when it did they did not cover it.
Nope, but you still are NOT getting a loan without it. There are a VERY FEW exceptions...but it’s almost impossible. Some hole-in-the-wall lenders might give you a loan w/o title insurance.
The title search is one thing. The title insurance company insuring the mortgage may not be the same company that did the title search. Happens every day. They act in two distint capacities.
At that value level you’ll have MI as well. Mortgage Insurance - you can sometimes get by without it but then the interest rate will be higher.
For that size loan the closing costs seem OK, maybe a bit high but again I’d want to see a full GFE to see what’s included in that. But I don’t know SC either.
How long are you staying in the house?
A lot of people complain about title insurance, perhaps fairly.
But PMI is the ultimate ripoff. One might as well take the money out to the back lawn and burn it.
Perhaps, but it protects the lender from default. If you owe more than 80% on a house the lender WILL lose money if they foreclose...in ANY market. That insurance makes sure they get paid.
Without it, we’d still need 20% down for everything. Some may argue that’s a good thing...but it’s not reality today and it is what it is.
Oh, I understand what it does. Nonetheless: rip-off.
The goal of title insurance is to prevent loss - extensive searches into possible liens, restrictions and encumbrances go into writing a policy. When doing a refi, always check with your current title insurance company to find out if they give any breaks for a refi policy, since they only have to search from the purchase or most recent refi date. Another company MAY offer a break if you provide them with a copy of your current title insurance policy.
Disclaimer: Many years ago, I was a title searcher for First American Title.
As long as it’s apples-to-apples...then you’re better off with higher closing costs and lower rate.
Here’s how you can tell the TOTAL loan cost, and it’s easier than APR.
Assuming you are financing the closing costs into the loan, this always works:
Take two proposals, either from the same company or different.
Have an amortization schedule made for each loan option you are considering.
Look at the ten year mark and see what you owe at that point for both cases.
THEN - take your monthly payment in each scenario and multiply it by 120 months (number of payments in ten years) and add that to the amount you’ll owe in ten years.
That’s how much each one will really cost you in that amount of time, including what you’ll owe when you go to sell. Forget APR’s and all that, this method works.
Refi to a 15 year.
***Title insurance is a scam and should be against the law.***
Why do you say that, Truth?
If he’s refinancing, all he’d need is an update on the title ins. he already holds.
If he’s buying the house for the first time, there can be unpaid liens against it for which he would be liable; there can be lawsuits against it by co-owners, etc. etc.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.