You have recently finished the process of investing in your brand new
home. In the morning you have the exciting task of picking up the keys
and undergoing the closing process. However, don�t get too excited yet,
you should be prepared by following a checklist before you close.
The first thing you should do is look over the good faith estimate. You
will be given one of these to let you know what monies you should have
with you at closing. You will want to go over every line to make sure
the figures are correct. It is time to redo the math to determine no
mistakes were made. This can happen and so can so many other things.
The good faith estimate is provided to you within three days of applying
for your loan. There are basically three elements on this document. The
loan fees, the interest rate, and the points. It is the fees which you
want to take a close look at when examining this document.
There are so many fees the lenders charge it is almost scary. You have
the typical loan origination fee. Then you may have a processing fee, a
registration fee, a document preparation fee, and many more. You can ask
for each and every one of these fees to be explained, reduced, or even
done away with when it comes time to actually sign the loan paperwork.
The lender will most likely explain that this is just company policy and
the fees are normal charges. It is these fees which can cause appalling
surprises at the closing table. The good faith estimate may state your
closing fees will only amount to $1,800 or so. When you get to the
table, the fees have jumped to over $2,500. Unfortunately this happens
more and more often these days.
The lender will lock in the interest rate and the points cap to ensure
you will use their services to acquire the loan. In actuality, it is the
lender's fees which should be locked in place. These are day to day fees
which may be necessary to pay and yet do not change a great deal over a
short period of time. Yet from the time you apply to the time you close
the processing fee went from $150 to $350. When you ask why you are told
that is the fee the bank is now charging. The question should be why is
there a processing fee when there is a loan origination fee? This is
something most buyers will just assume is a natural thing and opt to pay
it to save face. It is not necessary to do that.
When you talk with a lender, you can ask to have each fee broken down so
you can understand them. Many times when you do this and start asking
questions, the loan officer will adjust the rates and keep the fees more
simple. This will ensure you get the actual good faith estimate you are
supposed to be given. When you are all done negotiating with your
lender, do one other thing. Get it all in writing. You do not want any
more surprises at the closing table. By making the lender put in writing
exactly what they are going to charge you for each service, and making
them list each service individually, you can save yourself quite a bit
of money at the closing. Money you can spend on the new home you just
bought.
Return to Brokerforyou's real estate articles