OT Closing costs when buying a home

[miki]

A friend of mine is buying a home, new construction, and is having a rather negative experience. She said the builder (DR Horton) is charging them an amount that makes their closing costs 25% higher because somehow it costs the builder more money when the buyers want to include their closing costs in their final loan amount. This makes no sense to me. My friend's loan officer has no idea how this additional cost would come about but is not forthcoming with any suggestions on how to handle it. No one she's contacted on the builder's side can explain it or wants to explain it.

I think the builder is just trying to pad their bottom line but their attitude has been that they are a huge company that builds multi-million dollar houses and this is but a tiny house so how dare she complain about anything. She could hold up their closing but at the cost of having their rate lock expire and spending more money to extend.

Thoughts? Anyone with contacts at DR Horton?

[npace19147]

Sounds like your friend should contact a RE lawyer. If it is a scam by the builder then a letter on some "official" letterhead might get them to stop without too much $$ spent by your friend.

[karolyp]

It sounds pretty bogus to me too. Is it too late for your friend to look elsewhere for loans? I know when we bought our first home, the builder gave us like $3K towards closing costs if we went with their lender. But evem with that credit, they still were priced way over the average!

Anyhow, I would highly suggest your friend to take her good faith and get some more estimates.

Good luck!

[Momof3Labs]

Does she have an attorney working for her? Around here, the attorneys are downright cheap ($400 to do everything through the closing), and are good to have in case of weird things like this.

[DebbieJ]

Lori is right. We bought from a builder, but still had an attorney to get us through closing. There is just too much paper and fine print! He was a friend, so he charged less, but it was worth every penny. He check all the figures, made sure they were legit, etc.

She should really have someone on her side.

~ deb
DS born at home 12/03
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[peasprout]

DH does loans and he said 25% is really high and something sounds fishy. Sometimes these new constructions require you to use their loan officers, which might be why her agent isn't being very helpful,...he only stands to gain.
Definitely get a lawyer or someone to figure out what's going on with the builders. And if your friend is in California and wants a new loan agent (or is allowed to use one), DH could help you out! :)
JP

[bostonsmama]

Me, too. We've used a real estate lawyer every time we bought or refinanced a home. I think the first time it was $400, refinance $250. The only bad thing though is that the lawyer may discover her builder isn't doing anything illegal....how do you think car dealers get away with charging single sailors a 46% interest rate with a $10,000 balloon payment at the end when they go to buy a car? It's 100% legal as long as it's disclosed in the contract. I think there is some sort of "Truth in Lending" Act that's been passed by our state (or even the fed, not sure) where all that has to be disclosed upfront. Read the fine print...it may not have to explain why...just because, and that would leave a sour taste in my mouth.

Another option is that she can get a small loan through her bank or credit union to finance those closing costs (a personal loan for 36 months for 7-8% if she qualifies). IMO, it is so much better to pay those upfront and not turn $3,000 in closing costs into $7-10,000 in closing costs after you've paid all the finance charges on it..esp w/ the way the builder is treating her. Good luck helping her out.

Larissa
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