Should my closing costs change?!? I put a bid in on a house for $96,500 it got appraised at $85,000?

Does the $4500 include all your prepaid items as well? Taxes/insurance/escrow set up? If so, your fees are not out of line.

The only way your closing costs would decrease when the loan amount decreases would be if any of the fees were a percentage. Example: If the loan officer was charging you a 1% origination fee then that would decrease by about $100, since the percentage is based on the loan amount. Title insurance would decrease slightly, too, since it's based on loan amount, but the difference between 96.5 and 85 is really minimal on a title scale.

Everything else is basically a flat rate, closing fee, lender fees, taxes, insurance, etc.... It's not based on your loan size, so it would not decrease when the loan does.

Hope that helps!

Closing costs are based on the loan amount. In most places about 3 percent. So if the loan has been reduced you should pay less. Even without a downpayment 3 percent of 85,000 is $2,550. Sounds like you're paying way too much to me. Ask them to break down the costs for you. Sounds to me like they're charging you at least 2 points, which is in addition to the regular closing costs. Don't pay it.

Why would you pay over $10,000 more than what a home is appraised? If I were you, I'd offer the seller $85,000.

As for closing costs, they are based on the amount of the loan. The appraisal value does not affect closing costs at all.

I think the bigger question should be why are paying $96.5k for house that is only worth $85k? A home is an investment, and as soon as sign the papers you'll immediately be under water. You should re-think your bid.