Tips to save on loan fees
Some tips to save on loan fees are listed
throughout this page. Understanding the loan process and
what each fee is for will help you to understand what
fees are necessary and what fees are junk fees. Knowing
this alone will help you to save on loan fees.
The first tip is to understand which fees are negotiable and which fees can be deleted. There will be lender related fees which may be negotiable and government related fees which are usually not negotiable.
Ask the broker to send you a copy of the good faith estimate and don't be afraid to ask questions and demand answers for every penny listed on the estimate. ALSO, keep in mind that it is an estimate, and some of the figures can legally change before closing, so be sure to ask the broker which of those fees are constants, and which of the fees are variables.
A fee that is frequently overlooked is the notary fee. Many companies are now charging to have a notary signing agent come to your home to complete your loan documents. Typically the fee is around $350 to $450 for the service. The notary usually only gets about $75 to $125 of that fee and the rest is eaten up by the intermediate services. Ask to close your loan at the escrow company or contract your own notary by going to one of the notary signing agent bulletin boards like notaryrotary.com
The notaries are listed by zip code and their fees are usually posted on their profiles. Find an experienced notary near you and you may be able to save even more.
Keep in mind that if you are able to negotiate a lower fee, you should keep an eye on the interest rate to make sure it does not increase. Some lenders will offset your savings on the closing costs by inflating your interest rate.
Fees are generally broken into three categories: Fees associated with the Loan, Title/Government fees, and Pre-paids/Reserves. The title/government fees are standardized and will be the same regardless of who you do a loan with, so will the pre-paid/reserves. Only some of the fees associated with the loan can be negotiated.
In a purchase transaction the seller generally gets to choose the settlement agency and title attorney. Be sure to ask your mortgage broker to double check the fees being charged by the sellers chosen closing agents as this is often a source of dispute at settlement. If you think the fees are unreasonable you may be able to demand a neutral settlement agent be used.
Using the same mortgage company (mortgage broker), the same title company and/or the same appraisal company to handle all of your mortgage financing can usually save you a considerable amount of money from fees being charged to you. Many mortgage brokers will provide discounts for you if you continue to use their services for all of your home financing needs along with possibly being able to negotiate lower fees from the other service providers involved.
If you have questions regarding any of the fees you are being charged, do not hesitate to ask your mortgage professional what the fee is for. The only way you will know is if you ask. If you are being charged an application fee, ask if it is possible to get the loan without the application fee. Also, if you are being quoted X amount at one mortgage company, but you prefer another company, ask the other company if they are willing to match the closing costs if you were to bring in a good faith estimate. Often times they will, because they would like to have your business.
Some state require that mortgagors pay a percentage of the loan amount as mortgage tax. However, in a refinance, a homeowner may be allowed to save on a portion of the mortgage tax, provided a certain conditions are met. Consult a knowledgeable mortgage professional in your area for details particular to your situation.
One of the best ways to dramatically reduce your refinance closing costs is to discuss staying with your existing title insurance company. Discounts are generally made available by title insurance companies for customers who are refinancing and retaining the same title insurer. Because title search, abstract, escrow and title insurance are routinely handled by the same service provider in many states, the net savings on the average property can be thousands of dollars off of typical refinance closing costs.
Shop around. Noting is wrong with getting 3 or 4 different quotes and choosing the one that makes you feel comfortable. Keep in mind that most lenders rates will be about the same as will closing costs. With this in mind you will want to look at reputation, speed of closing and professionalism of the company you choose to deal with.
According to federal law, 3rd party fees can be passed on to you but they cannot be increased over what is charged to the broker. 3rd party fees can include appraisal report, pest inspection, credit report, underwriter fee, flood certification, etc. Most of these fees are not considered tax deductions that can be written off. Ways to get these fees to become tax deductions is to ask your broker to increase the origination fee and have that payoff the various fees.
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Information listed above is to be used for educational purposes only and is not guaranteed
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