Before you take a mortgage, learn how to lower mortgage closing costs here. Join us as we reveal the best ways of reducing mortgage closing fees.
RELATED: What are Mortgage Closing Costs? - Closing Fees Explained
While most people are aware that there are additional fees when buying a property, they still get a rude shock when seeing their mortgage closing costs for the first time. In general, closing fees will be in the range of $3,000 to $4,500.
The good news here is that you can can take steps to lower mortgage closing costs and fees:
Underwriting fees are charged by mortgage lenders to lower the risk of making a property loan to you. Some experts feel that this fee shouldn't be imposed at all since the very nature of lending money involves risk. If your lender charges an underwriting fee, you should push for a lower fee especially if you have excellent credit scores.
Funding fees are charged by lenders to transfer or wire your money to complete the real estate deal. Since this is your lender's job anyway, you shouldn't have to pay extra for this service. Try to have your lender waive this fee.
When buying a new property, a survey will be carried out to ensure that your property boundaries are clearly defined to avoid any disputes.
If you are refinancing (instead of getting a new loan), you may be able to eliminate this survey fee by asking your lender to re-certify the existing survey. Non-landed property such as apartments don't require a survey so make sure you don't get charged for it.
Reducing mortgage closing costs by third party companies: Ask your lender to produce receipts and only pay the amounts stated on those receipts. This will help you to avoid overpaying for "padded" charges (inflated charges by greedy lenders such as charging you $120 for a $30 credit report).
To lower mortgage closing costs, go through every fee with your lender and get them to explain any fees that you don't understand. That way, you're likely to spot and strike off junk charges. Junk charges are dubious costs with fanciful names imposed by lenders to make a quick buck.
No matter what you are buying, shopping around and comparing prices has always been a proven method of finding the best bargains. This universal rule also applies to property buyers who want to reduce mortgage closing costs.
Time and time again, we are shocked by the property buyers who will go straight to their family bank and accept the good faith estimate quoted by that bank without question or comparisons.
While every lender will be most happy to show you their loan packages, not all of them will reveal their good faith estimates before you apply for a mortgage loan. Before you settle for a lender, approach a few of them (three minimum, five recommended) and insist that they give you a good faith estimate of all their closing costs.
Remember that lenders have a lot of leeway when making these estimates... so what's even important is to ask the lenders whether their final mortgage closing costs are likely to vary from this good faith estimate.