|
| |
Understanding
Mortgages PART 2
How to Lower Your Mortgage Closing Fees and Costs
Before
you
get your hands on a new mortgage, understanding mortgages is an
important step to lower your mortgage closing fees. Find out how you
can handle your lenders and shave hundreds of dollars off your mortgage
closing costs today in this Part
2 of our Mortgage Guide.
Have you read
our expert advice on how to lower your mortgage closing costs in Part
1? If No, Click
here for Part 1
of this Guide on Understanding Mortgage Loans.
Always
Ask for 3rd Party Receipts and Get Rid of Any Junk Charges
After you lower mortgage
closing fees
outlined in Part 1, it's
time for us to target other closing costs linked with
your mortgages.
Whenever there are mortgage closing fees by outside companies, always
ask
your lender to produce receipts and only pay the exact amounts stated
on those receipts. This will help you to avoid overpaying for "heavily
padded" charges (over inflated charges imposed by greedy
lenders such as charging you $120 for a $30 credit report).
By understanding mortgages, you will know that common 3rd party costs
include credit report fees, appraisal fees,
survey fees, title fees and insurance fees.
When you are going the list of mortgage closing costs with your lender,
go through every item on the list and have explain them any
costs that you don't understand. You are likely to spot and strike off
some junk charges which are dubious costs with fanciful names slapped
on by some lenders to make a quick buck.
Shop
Around for the Best Bargains and Ask for Good Faith Estimates
No
matter what you are buying, understanding mortgages and shopping around
has always been the trusted
way to grab hold of the best bargains. This universal rule applies for
your home loan or rental property mortgages as well.
Time and time
again we are shocked by the many property buyers who will just drop by
their usual family bank and accept the good faith estimate quoted by
that bank without questioning.
While every
lender will happily show you their loan packages and interest rates,
not all of them will reveal their good faith estimates before you apply
for a mortgage loan. Approach
several mortgage lenders (some experts recommend looking for up to a
dozen) and insist that they give you a good faith estimate of all their
closing costs.
More importantly question the lenders if the
final mortgage closing costs are likely to vary a lot from this good
faith
estimate. Remember these estimates are only rough guesses and not
ironclad guarantee so you have to confirm their accuracy.
What to do if You
Cannot Afford Your Mortgage Closing Fees and Costs
Forking
out the down payment for a property is a heavy burden for most people
by itself, so it's no surprise that some buyers will have trouble
coming up with the mortgage closing costs that will often run into the
thousands.
If
you don't have enough cash lying around for your closing costs, there's
no need to worry. If you had put down a larger
percent as
down payment, you can usually request your lender to add or "roll in"
the mortgage closing fees to the total loan amount.
Understanding mortgages - For
example your original landlord mortgage is $100,000 and closing costs
are $3,000, you can request your lender to combine them so you
will be borrowing a total of $103,000 instead.
Another way is go for a
"zero cost" mortgage where you don't have to pay any closing costs but
you will end up paying higher interest rates instead (usually 0.25%
more). Let's say your original mortgage is $100,000 at 7% interest
rate. If you choose to waive the closing costs, your mortgage rate will
be upped to 7.25% instead.
Do you want to learn MORE practical must-know facts on
rental property loans?
Return
from
this Understanding Mortgages page to our Financing
Investment Properties guide
|
|
