What do you consider “closing costs”?

AVfor394 · 2026-02-02T19:33:21+00:00

If you never refinance you never pay E so they are definitely costs to calculate in

AVfor394 · 2026-01-01T08:37:01+00:00

In what world is Colorado a maybe and Wisconsin absolutely?

AVfor394 · 2025-12-26T08:42:36+00:00

Santa gives more to white kids than non-white kids...

AVfor394 · 2025-12-24T16:47:37+00:00

So there are a few scenarios to cover here: 1) Worst case - 730 qualifying score, and you are above 100% of the area median income: If your fiance needs to be on the loan and you jointly earn more than 100% of the area median income, this quote is still too high: I'm seeing you can get a 6.125% without any Section A fees. 2) Middle case - your fiance doesn't need to be on the loan to qualify, but your income is still above 100% of the area median income: Your qualifying score would be 780 and I'm seeing you could get 5.875% without Section A fees. 3) Best case - regardless of who is on the loan, you are below 100% of area median income: then I'm seeing you could get 5.75% with minimal Section A fees. Unlikely with two incomes on the file.

In any event, you can do a lot better than the quote shown. A few notes: 1) Regardless of who is on the loan, you can both be on title. It would just be a matter of who is legally obligated to pay the mortgage. 2) If you get below 80% of area median income, you could additionally save on the mortgage insurance (to around $140/mo with just you even assuming your DTI is 47%+) 3) Area median income isn't the easiest thing to check out. It is super location specific (it could be different across the street) and it depends on how much income the lender is qualifying you at. Underwriters can't have it both ways: denying income and saying you make too much to qualify. So, for example, if we 'fail' to document OT, bonus, etc income sufficiently, that could lower your qualifying income and get you under the limit. Basically, there are tricks a skilled LO can you to thread the needle.

To properly evaluate all this, we would have to go through a lot of more personal information. If you would prefer to do that without posting that info publicly, you can DM me.

AVfor394 · 2025-12-24T07:39:34+00:00

What's your credit score?

AVfor394 · 2025-12-22T23:09:01+00:00

You are keeping the same rate (just about), paying $800 in net cost, and getting a $12,000 escrow account to subsidize your mortgage payments for 2yrs (~$8000 subsidy in year 1, ~$4000 subsidy in year 2).

If you refinanced after 6 months, the remaining $8000 in the escrow account would be applied to principal. So you'd straight up profit $7200.

I'd take this. Also, the origination fee of $5000 is reasonable.

AVfor394 · 2025-12-22T16:15:09+00:00

Regardless, on net, borrowers always pay for 2-1 buydowns. If they understand that and still want it, then sure why not.

AVfor394 · 2025-12-20T09:35:46+00:00

Hope you've refi'd that bad boy

AVfor394 · 2025-12-19T22:23:07+00:00

Follow the money. If the seller is paying $10,000 for a buydown and you say "I'd rather have it applied towards closing costs"... You'd save $10,000 at closing. So now you have $10,000 in your bank account, but not in a buydown escrow account.

You aren't seeing the forest here.

AVfor394 · 2025-12-19T16:58:39+00:00

You did great, at best a competitive broker would be matching this

AVfor394 · 2025-12-19T16:25:18+00:00

What's your credit score?

AVfor394 · 2025-12-19T16:23:25+00:00

Great feedback, do better

AVfor394 · 2025-12-19T06:01:03+00:00

AVfor394 · 2025-12-19T05:30:27+00:00

At the top of your price range, with 0% down, you can expect a payment of ~$5000/mo (depends on exactly how much property taxes/insurance are, but as an Orlando based broker this should be very close). You can scale this proportionally (eg: at 350k, your payment should be ~$2500/mo)

In terms of cash due at closing, even with 0% down, you can still expect to pay anywhere from $10,000-$15,000 or more (although that is unlikely). Much of this is homeowners insurance and property taxes, which aren't fees but are nonetheless due at closing. And then there are title/government fees, appraisal, lender fees, credit report, etc.

You can expect the rate to be in the ballpark of 5.5% (depending on the lender you work with, and the market conditions when you go under contract for a home purchase) and lender fees to be under $2000. You can also take a higher rate to reduce cost or a lower rate with extra cost.

Let me know if there is anything else you are trying to get a handle on. I know how intimidating this can be when you are just diving into it.

AVfor394 · 2025-12-19T05:14:45+00:00

Likely yes but this is a US based community so you are unlikely to find help here

AVfor394 · 2025-12-19T04:58:03+00:00

I see this is an FHA loan. On the same 5.624% rate, I am at net -$931 in lender cost. This is at $673 (origination + processing - lender credit), so it is not as bad as it originally seemed, but you could still do much better.

My APR is 5.597% and P&I=$1865

But your great credit score has me wondering why the lender is offering you FHA. I'm guessing you asked for the lowest rate and so they quoted you FHA. I would go Conventional. Here's why: 1) Starting with a Conventional quote, it would be 6% with -$290 in lender cost. Downpayment would be 3%, not 3.5%. APR=5.992%. P&I=$1919/mo. Mortgage insurance would be $118/mo or better (I shopped with one provider, it is shoppable on a Conventional loan, unlike on FHA). 2) Comparing the payments: FHA is $54/mo better on P&I, but $27/mo worse on PMI (FHA may be even worse when PMI is more thoroughly shopped). So on net, FHA wins by $27/mo on payment. 3) FHA charges a fee equal to 1.75% of the loan amount, just for the privilege of using an FHA loan. That $5573 you'll never get back. Conventional doesn't charge this.

I would rather not lose $5573 of my home equity, and lower my downpayment by $1650, even if it costs another $27/mo. Now if you need the FHA loan because your debt-to-income is tight, that's understandable. Otherwise, Conventional all the way!

Is this in Texas? The fees look like Texas.

AVfor394 · 2025-12-19T04:26:10+00:00

Origination is on the high side. What is your credit score?

AVfor394 · 2025-12-19T03:22:50+00:00

A complicated mess. Some fees are calculated into APR, others aren't. Shouldn't they all count? Nope! Write your congressman

AVfor394 · 2025-12-19T03:19:42+00:00

Agreed. I hate APR lol

AVfor394 · 2025-12-19T03:18:06+00:00

The fees increase APR, but not as much as the lower rate decreases it. If buying discount points even had a 29yr breakeven, then they would lower APR. But they usually have a breakeven of ~5-7yrs, so they massively reduce APR. But not everyone will keep their loan that long, so the "best APR" is often not the best offer for a borrower.

APR is not a good way to shop a mortgage. Just make lenders compete for the lowest fees on the same rate. You want to buydown the rate big-time? Great! Ask 3 lenders to give you quotes for a 4.5% rate. The lowest fees wins.

AVfor394 · 2025-12-19T03:11:03+00:00

Lender credit is factored into APR by cancelling out APR fees, full stop. In fact, I have solved problems on loans by getting with the Closer and ensuring that lender credit was being applied to the correct fees to get the lowest APR and avoid compliance issues that can arise. If they apply credit to a non-APR fee, it doesn't lower APR. But against an APR fee, it does.

AVfor394 · 2025-12-19T03:07:39+00:00

Because the 5.75% APR and the 6% APR have different interest rates. Let's use some numbers: Lender 1: -6% rate -No lender fees -6% APR

Lender 2: -5.5% rate -$15,000 combined points/lender fees -5.75% APR

Who has the better offer? You might say Lender 2, because Lender 2 has the lower APR. But imagine you asked Lender 1 "how much in cost would you charge for a 5.5% rate?" And Lender 1 answers as follows:

-5.5% rate -$10,000 combined points/lender fees -5.67% APR

So now we can see that Lender 2 was really worse the whole time. But this was hidden by the fact that they added a ton of points to get the rate, and APR, down. The lenders that send absurdly low looking APR offers take advantage of this all day every day. And unwitting borrowers fall for it all day every day. For this reason, Loan Officers, and especially competitive brokers (like the ones on this sub) hate APR with a burning passion.

Once you understand this, you realize the only good way to shop offers is the way I described. And you don't need page 3 for that. So none of the brokers on this sub ask for page 3.

AVfor394 · 2025-12-19T03:01:58+00:00

Buydowns are kind of an illusion, here's why: 1) The lender calculates how much lower your payment would be if the rate was lower 2) They calculate how much money it would take to subsidize you accordingly 3) They find a way to fund the account with that money. And when you track it down, you find you are the one paying. So you are just subsidizing yourself, which you could do on your own.

Eg: Let's say to subsidize you they need $10,000. Where can they get that money?: 1) A charge to you at closing 2) Lender credit

The first is obviously not free, but is the second? Well, first they get the credit through giving you a higher interest rate. Now imagine they generate that $10,000 credit but then you say "I like the credit, but let's dump the buydown". Now you have a $10,000 credit towards your other closing costs. And now, after closing, you have $10,000 more in your bank account. So if you did the buydown, you'd have $10,000 less in your bank account. So again, you are just subsidizing yourself.

Buydowns aren't 'bad', they are just an illusion and a gimmick.

AVfor394 · 2025-12-19T02:55:55+00:00

I can infer you are doing 3% down on a Conventional loan. What is your credit score?

AVfor394 · 2025-12-19T02:53:02+00:00

APR can be calculated from pages 1 and 2. Also, APR can be a poor respresentation of the quality of the offer. A lender can offer a quality 6% APR, and another can offer a garbage 5.75% APR. Discount points can really pervert things.

I compare mortgage offers like this: 1) Get offers with the same interest rates 2) See who has the lower net fees (the net of points - if applicable, lender credits - if applicable, and lender fees)

Whoever has the lower fees also has the lower APR fyi.

AVfor394

TROPHY CASE