Reduce your closing costs
More rates and news from
Yahoo Finance and Realty Times
By Melissa Wirkus
Whether you are buying your first home or refinancing
an existing mortgage, you will have to pay closing costs.
Many people do not think about closing costs right up front, but
they can add up to be enormous fees in the end, especially if you
are not smart about the transaction.
If you are an educated and informed borrower you will find that
there are ways to cut your closing costs, which could save you a
bundle in the end.
An article by Sarah Max of CNNMoney.com, “Take a bite out
of closing costs,” looks at smart ways to reduce these tricky
little fees.
“As anyone who has shopped around for a mortgage knows, it's
extremely difficult to compare one lender's offering with that of
another lender because the up-front fees vary so much and are not
guaranteed. Lenders and their venders can, and sometimes do, add
or inflate fees in the eleventh hour of a transaction.”
“The U.S. Department of Housing and
Urban Development (HUD) has been working on regulations that promise
to simplify the mortgage process and save consumers as much as $1,000
off a typical mortgage transaction. When such rules will be rolled
out, if ever, is still anyone's guess.”
If you are doing a refinance, the first thing to do is to contact
your current lender
since you already have an existing relationship with them.
“If you're looking into refinancing, the first call you should
make is to your existing lender, who already has critical information
about you and your house on file, said Keith Gumbinger, vice president
for HSH Associates.”
“Since you have an existing relationship, a ‘streamlined’
process might be possible. That can save you a lot of extra paperwork
and money on everything from application fees to appraisal fees.”
If this is your first mortgage
transaction, understand that a variety of fees will appear under
the closing costs section of your paperwork. Do not be alarmed,
but be sure you look over each and every one of them.
“Lenders are required to give you a good-faith estimate of
your closing costs within three days after you apply for a loan.
Some will give you such an estimate even before you apply if you
ask for one. Even if it is no guarantee, this written estimate will
give you an idea of what kind of fees you can expect to pay, as
well as an opportunity to negotiate for a better deal.”
When thinking about your closing costs, be sure that you do remember
to keep the big picture in mind, and to not be consumed with the
closing costs.
You must keep in mind interest
rates and points, and figure out if paying a bit more in closing
costs will help get a lower interest rate. These are all important
things to take into consideration.
“Closing costs are certainly a consideration for both new
loans and refinancing. But it's important to not lose sight of what
should be your first priority – getting the lowest rate possible.
Indeed, the difference between paying, say, 6 percent and 5.5 percent
on a new loan adds up to nearly $23,000 in total interest on a $200,000
30-year loan. If you have to pay a few hundred dollars in closing
costs to get that rate, you can rest assured that it is a worthy
investment.”
