Debt Reduction Advice | Debt Reduction Advice

No one likes closing costs. When you’re purchasing a home that often costs hundreds of thousands of dollars, few things are more annoying than the feeling that you’re mortgage lender is nickel-and-diming you for every fee they can think of. Of course getting a loan will never be free and lenders should be compensated for the work they do and the risk they take, but minimizing closing costs should be a priority in every mortgage process. Most buyers don’t realize that many of the items included in the final closing costs are either unnecessary or negotiable.

A recent survey showed that the average closing costs are highest in the states of New York, Texas, and Florida. North Carolina was found to have the lowest closing costs on average, replacing Indiana from 2008 in the survey. The variation in average closing costs can be blamed on a combination of taxes and fees that vary as the home-buying process differs from state to state. Here are some keys to making sure you don’t get taken advantage of with closing costs.

Compare Estimates and Ask Questions: All lenders are required to provide a good faith estimate to borrowers and this is the key to comparing the costs of closing among lenders. Most buyers simply accept these costs without asking questions but you should understand what you’re being charged for. Different lenders have different names for certain fees so the more you understand, the more you’ll be able to compare apples to apples. The most common fees that can be negotiated with lenders are origination fees and title fees.

Watch for Suspicious Fees: Some lenders make a lot of money by double dipping, or charging two separate fees with different names for the same service. For example, a broker fee is the same as an origination fee, so those shouldn’t generally be two separate line items on a GFE.

Make Your Voice Heard: Many states with the highest average closing costs find themselves near the top of that list because of fees that are beyond the control of lenders. For example, most states require some form of title insurance, but Florida, New Mexico, and Texas all charge hundreds of dollars more than the average amount for title insurance. By voting for measures designed to lower the costs of title insurance, you can help to reduce your closing costs in the future.

Hire Experienced Help: Most borrowers are suckers and they simply don’t know any better when they’re being taken advantage of. For a few hundred dollars, it wouldn’t be a bad idea to hire an attorney to work in your behalf with your lender. It will cost some money but many times the money you save will more than pay the cost of the attorney’s fees. You’ll also rest assured that the closing costs you paid were reasonable and fair. A lender is much more likely to be direct and honest when they know you’re serious about getting the best deal possible.