Mortgage : Home Loans : Refinance : Home Equity Loans

By Ben Afzal

Basics

Your mortgage closing costs will include many different types of costs. These costs can be separated into two groups:

• larger charges
• smaller charges

Larger Mortgage Closing Costs

Larger closing costs may include:

• realtor commissions
• mortgage broker commissions
• lender fees

Smaller Mortgage Closing Costs

The closing costs can include:

• courier fees
• money wire fees
• escrow fees
• title fees
• hazard insurance policy
• title insurance policy
• public filing fees
• notary fees

You are better off focusing on the larger costs.

The realtor commissions are usually determined prior to your offer. You don’t have much negotiating power here, unless you think a realtor can give you a break on their commission.

The other large area where you can save a bundle is on loan closing costs. The loan closing costs that you are offered may differ grealty between different loan sources.

Do not automatically go with your corner bank that you normally use for your checking or savings account. Often times these institutions will charge fees because they have a built in customer base that may go along with their offer. There are literally hundreds of mortgage loan sources out there, so your neighborhood bank is not the only game in town.

You generally should not spend more than 1%-2% of the loan amount in loan closing costs.

Often times a lender will offer a “no closing cost” option. This is usually offered with a higher interest rate. If you plan on keeping the mortgage loan for a while it may make sense financially to pay your fees up front in exchange for a lower payment. If you don’t plan on keeping the property or mortgage for long you may choose to go with a no-closing cost option. When you do this make sure you understand what, if any, prepayment penalty there will be.

Conclusion

When you apply with different len!
ders or
mortgage brokers you will be given a written “Good Faith Estimate”. This is only an estimate, and not a guarantee, of the fees you may be charged at your loan closing.

Remember that some offers may look a lot cheaper than others because many of the actual charges are left out of the estimate. Make sure if there is nothing listed for a line item expense that the cost really will be nothing.

Since the “Good Faith Estimate” is only an estimate there is an incentive to low ball the estimate to match or beat the competition.

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For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
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This entry was posted on Wednesday, October 11th, 2006 at 2:07 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.