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I inherited my fathers property and realized that out of the $ 499,000 mortgage he had only $ 465,000 went to him. The rest went to numerous people including $ 21k to a title company. Is this normal? What is the average cost of a mortgage, and does it usually cost more the more you barrow(not talking about intrest)?
Thank you very much. I am not concerned about it at this point, but I may barrow against the current equity to improve the property and am wondering if so, what can I expect?

5 Thoughts on Closing costs for a mortgage?
  1. Reply
    Dale H
    February 5, 2014 at 6:46 pm

    I would have to see the settlement statement to see what all of the charges are to say for sure, but 21K seems high.

    However, 499 – 465 = 34K. Where did the rest of it go?

    Some closing costs are proportional to the amount borrowed; points, title insurance ($ per thousand), but many others are flat fees; appraisal, closing fee, title examination, recording, etc.

    Where there amounts paid for real estate taxes? Home owners insurance? Odd days interest? These are what are referred to as pre-paids and are not closing costs per se. Rather, you would add the closing costs and pre-paids together to come up with the settlement charges to the borrower.

    I don’t know what you can do about any of it at this point. The time to question any of the charges is prior to closing. It sounds like this could be water over the dam at this point.

  2. Reply
    February 5, 2014 at 7:01 pm

    21K to a title company is way more than I’ve ever seen. The only reason I can think of for this is if there was a title problem that cost 21K to resolve (but even then the seller should’ve paid for it). You need to give more detail on waht this item was for, but 21K to a title company is highly unusual, though possible. It also possible the title company way, way overcharged him but this does not mean the charges were not legal – so maybe he was cheated, but legally cheated ie nothing you can do about it.

    Also you can borrow against the current equity but only if the equity is at least above 10% beyond the mortgage. IE if the mortgage is now about 465K and the value is about 500K there really isn’t enough equity that you are going to be able to borrow anything. If the loan were say 300K and the value is 600K, then yeah you can take some money out (if you have the credit and income to qualify for a 2nd mortgage or a heloc).

  3. Reply
    February 5, 2014 at 7:49 pm

    Total average is about 6%

  4. Reply
    Doctor Deth
    February 5, 2014 at 8:16 pm

    Title company should only get a few 100 – Both sides would have to pay a real estate transfer tax – possibly 2-4% total, plus property taxes up to the point of transfer from the beginning of the “tax” year – different from the calendar year – all the costs should be detailed on the settlement paperwork of closing costs worksheet. If you inherited the house – why did you need such a large mortgage? if there was no equity in the property, why not just sell it keep the proceeds?

  5. Reply
    February 5, 2014 at 8:33 pm

    The closing costs on a reverse mortgage are very high, higher than a typical mortgage.

    I would question the $ 21k to the title company, unless there was a significant problem with obtaining title, that is a very high fee.

    Typical closing costs on a traditional mortgage are 3%.

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