Save Money On Mortgage Fees – Save Money On Closing Costs!
Buying a house is not an easy process and it’s made even more difficult when you have to calculate the various expenses that come along with it. From paying your realtor to managing the movers’ fee, you have quite a few costs to take care of.
However, perhaps the most complex of these costs is the mortgage fees. Also referred to as “closing costs,” these fees can include an array of charges such as lawyer’s and title fees, as well as title and house tax, and more.
Separate from the interest rate, these closing costs are inevitable and unlike any pending repairs on the house, they cannot be postponed until a later date. However, you don’t always have to allocate a large portion of your budget toward these costs. Instead, take a few steps to reduce these closing costs by a significant margin.
These days, many people aren’t even clear on the various fees involved in the home buying process. Whereas, many of those who are aware simply don’t have the time or resources to shop around and compare prices from a list of vendors. The lender makes the decisions for them, and the consumers ends up paying for it.
In order to make sure that you don’t find yourself locked down in such a situation, here are a few tips on how you can save on closing costs or mortgage fees.
1. Know What the Fees are About
These fees can relate to a variety of processes that are integral to the home buying process. From legal costs to document delivery, the closing costs can hold a few segments of procedures within them.
According to the Consumer Financial Protection Bureau (CFPB), some of the most common aspects of such costs include, but are not limited to:
- Appraisal fees
- Title insurance
- Government taxes
- Fees for the tax service provider
- Property taxes
- The interest accrued until you make your first payment
A complete breakdown of these services can be found within the Home Loan Toolkit guide provided by the CFPB.
Learn about these fees in a comprehensive manner, and understand why they occur within the transaction. This, in turn, will help you make informed decisions on how to save on various aspects of these costs.
2. Get Loan Estimates
Once you have an understanding of the breadth of these fees, the next step will be to see how each bank or lender is handling them on your behalf. While lenders don’t show these costs in the initial documents, they will provide an estimate upon request.
To get the loan estimate, you do need to provide your own personal information such as your income, social security number, and the home address. The request also generally comes with a small fee, but it’s worth it in the long run since you receive information on how different lenders handle their costs. This is your opportunity to shop around for the best lender that could help you with maintaining affordable mortgage fees, so ensure that you make the most out of the opportunity.
Obtaining a mortgage is an extensive process and the loan estimate may take a few days to process and finalize. The process is explained in the CFPB’s Loan Estimate Explainer document in a detailed manner.
3. Save Money By Making Decisions on Services You Can Control
While you cannot exclude any service or process from the closing costs, the loan estimate and one particular section give you the control of how you may control the majority of these costs.
A section on Services You Can Shop For can be found on the loan estimate form. This outlines the services where you have the option to choose between different providers, based upon your level of comfort with them and the fees that they charge. You may choose any provider that is outlined on the list.
Usually, you aren’t able to choose your own provider that is not mentioned on the list for a service, but some banks and lenders may allow it. So make sure that you reach out to the lender for confirmation on this aspect.
4. Get to Know About Origination Charges
On this list of various closing costs, the origination charges are one of the most important points and something that you can control simply through your choice of lender.
The origination cost is the processing fee that is charged on top of your application. As such, it won’t be incorrect to classify it as handling charges for your application.
The fee is classified as an unnecessary charge by many in the industry, who think that the fee for simply sending a document isn’t justified as the overall closing costs already take care of the process. But with that being said, the differing views do not make the origination cost obsolete. It’s actually present on file for almost every other bank and credit union, even if some in the industry are drawing away from those charges. So be sure to keep these costs in mind.
5. Prepare for Charges You Cannot Control, But Can Still Question
Some fees such as the appraisal charges are rendered as non-negotiable by most banks or lenders. However, you can still compare their costs and question them accordingly and you should still get estimates from third-party providers about the charges you cannot control as this can sometimes provide you with significantly lower costs.
You can then base your argument with the lender on the compiled data, and ask them why their recommended provider is charging a higher fee. You may then push for the process on how to change the vendor that is blatantly charging you more than the industry rate.
This act of negotiating over items that are classified as being out of your control may seem like a time consuming and arguably time wasting approach, but it can be effective. Lenders heed to complaints regarding large differences in such costs since the fees actually go to their chosen lender and not to them.
The Key to Saving Costs Lies Within the Information You Gather
When it comes to mortgages, the more you know, the more you’re able to benefit. Closing costs or mortgage fees are no exception to this rule.
Since buying a house is a decision that most possibly stays with you for the rest of your life, taking your time to understand the process and making informed decisions goes a long way. Ensuring that you trust your judgment is crucial in this aspect, but the ability to reach out to your bank or lender without hesitation is also very important.
Make sure to tackle the mortgage process with no hesitation to learn or demand new information, and you will be able to save on those mortgage-related costs.
Do you have any other tips on how to save money on closing costs or how to save money on mortgage fees? Comment below and let us know your thoughts. Want to keep them private? Shoot us an email to Outreach@