No. of Recommendations: 3
Hi Peggoty,

> Dear Dave, Your mortgage info above was so helpful; I do have another
> question, now that you've been so helpful: I was going
> to go w/a GMAC loan because their 30yr. rate today is w/zero points
> 6.990%--the lowest
> I can find. Imagine my shock when they socked me with a $3500
> closing cost--not including any escrow--which they refuse to itemize.

Did you get a Good Faith Estimate from them sent or delivered within 72
hours after they received your initial standardized mortgage application?

If not, itemized for all line item services required, they are out of
compliance with the RESPA act, and you could cite them to your state finance agency.

> They insist these are closing costs, NOT points, even though
> they call them "discount points."

Hmmm... are they "closing costs," or "discount points?" 2 different
things! "Points" in general is a vague term that nobody accurately defines until you pin them down anyway... (including borrowers.) Discount points are paid to the lender for a lower interest rate. RESPA clearly states that all 3rd party services must be disclosed for actual costs paid, regardless of by whom.

Is it worth to pay over $2000 than
> other places charge in
> closing costs to get this lower mortgage rate? The difference is
> between 7.25 and 6.99 (7.158 APR).

I haven't heard of anyone closing a 30 year fixed at 7% with LESS than
$2k in closing costs (not including prepaid insurance, interest, and taxes.)

At least not since the low in 1997.

> And is it legal for them to refuse to itemize, and to call them "discount
> points" -- or are discount points the same thing as settlement costs?
> Thank you so much for your help.

RESPA clearly states that whether you are paying the appraiser, title
company, etc, or whether the lender is from rebates for higher interest
rates, the specified costs of each service MUST be itemized on the GFE.

If you want an honest deal, with straightforward costs and the best possible rates, find a trustworthy mortgage professional (that's not necessarily an oxymoron.) You won't get sexxy lies up front, but you will get the best deal in the end.

Good luck,
David Donhoff
Lic. Mortgage Broker
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