Expert tips on evaluating and managing the cost of your mortgage
As mortgage rates continue to stay at record lows, the costs of obtaining a mortgage are going up — according to Bankrate’s annual survey of closing costs, the average origination and title fees have jumped 8.8 percent from August 2010 to August of the this year.
Closing fees are not set in stone, and savvy mortgage shoppers can often reduce these costs or spread them out over time to minimize the financial burden. Remember to be cool as ICE in negotiations, and you might save yourself some money:
ITEMIZE —make sure every single fee is identified and explained. Ask your lender to break down grouped fees line by line and to explain any fees that are unclear.
COMPARE —all lenders are not created equal. Compare loan costs from different lenders, and weigh the loan parameters as well. Low cost and no-cost loans often end up costing a lot more in the long term through higher rates and/or stiffer penalties.
EDUCATE —make sure you understand each fee and which ones have more play. Often “lender’s fees,” which can include loan-origination, administrative costs, wire-transfer, mortgage insurance application fee, among others, are the most negotiable. Third-party fees, fees that are passed through from another service provider to you, are less likely to be negotiable.
All experts agree, one of the best things you can do when applying for a mortgage is to request a Good Faith Estimate (GFE) from at least three different lenders. GFEs are a written estimate produced by lenders estimating all anticipated closing costs. Lenders are required by law to provide as accurate a GFE as possible to the inquiring borrower within three days after receiving a mortgage application.
For more tips on closing costs, visit these resources:
- Zillow.com: Curbing Closing Costs and Understanding Mortgage Fees and Closing Costs
- SayEducate.com: How to Reduce Your Closing Costs
- BankRate.com: Is no-closing-cost mortgage for you?
- Real Estate on MSN.com: 2011 closing costs survey: Which states have the highest, the lowest?