The tale of my home buying process in today's marketplace has all the elements of a best selling tale! But, I will cut to the immediate dilemma I am facing.
On a home which has a leaking roof, no appliances and some maintenance issues, conventional mortgage is ruled out (or so I am told). The only options are buy with cash or buy with a 203k kind of a loan. Since I dont have that much cash, i chose to go for a 203k loan.
I approached a broker and a well known Retail bank for such a loan. I got GFE from both and chose to go with the broker since there costs were significantly lower than the Large Retail Bank. The difference was primarily a large chunk of loan discount points.
I received my HUD-1 couple of days back (after a long delayed funding processs, where I had to seek 3 extensions on the closing date from the seller who is a Bank), which is another tale altogether. I was surprised to see about $ 40k in all closing costs on a loan of 465k (I live in San Diego). Largest surprise was a MANDATORY 2.5 points in Loan discount and about 2k in various processing and admin charges. [Of course, the Hazard Insurance is another 3.5k because of wooden, leaking roof, but that can be taken care of honestly quickly]. There is one point in Origination, but that was told upfront.
Now, my broker tells me that this is the best they can do inspite of the incorrect GFE, since they say this is absolutely the best deal I can dream of having on a 203k loan, which evidently no lender wants to do (shows!).
I have 2 choices – I can walk away from the broker/ lender and find a new one (question for another extension from seller) or suck it up pay everything as I am being questioned for (and maybe go legal after i buy the home for predatory lending practices).
My question to the experienced folks out there – Are 203k loans really this expensive? I am paying $ 18k in origination points and fees and a 1.75% (changed from 1.5% till dec 2008) in PMI to FHA apart for the other normal / prepaid costs.
Secondly, does anyone know of any alternatives where I can get to buy the house and maybe get a second line of credit for making repairs on the house or should i just try and approach a more reasonable lender who does 203k?
Any help will be greatly appreciated. I have been trying to solve this since late October and a part of me is desperate for a choice – excellent or terrible.
Thank you.
Tags: 203k loan, 203k loans, appliances, chunk, closing costs, closing date, conventional mortgage, couple of days, dilemma, FHA, FHA 203k, hazard insurance, home buying process, HUD, leaking roof, loan discount points, maintenance issues, origination points, pmi, predatory lending practices, retail bank
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