Friday, August 28, 2009
Closing costs can take the joy and excitement out of buying a home and turn it into a grueling and upsetting experience. Knowing what costs you'll incur beforehand can eliminate the surprise many people experience when it is time to close on their dream home. Talk to friends and relatives who have gone through the process in order to gain some insight and perspective on what costs you should expect when you are finally ready to close on your new home.
There are two types of fees imposed by lenders, one is actual costs to the lender, and these are difficult to impossible to have changed. Examples of these fees are credit check fee, appraisal fee, title insurance fee, prep fees, and government fees. The second type of closing fee is charged directly by the lender, so there is some potential for negotiation. Examples are loan originating fees, application fees, and underwriting fees. Both loan originating and application fees cover the cost of the lender doing business with you, therefore both fees could be negotiated. Ask your lender to combine both fees and set a discount rate for this combination. By understanding which fees can be negotiated and which can't, you can put your negotiating skills to use where they can make a difference. Having knowledge about what costs to expect at closing will make the process much less of a hurdle to overcome in order to complete one of your most important purchases.