Buying your first property is absolutely thrilling until you suddenly realize a number of extra charges appearing during the closing procedure. Nothing is more disappointing in the world than the initial charge turning out to be a couple of thousand dollars higher.
Nevertheless, this sum is completely negotiable, and there are some powers that your lender won’t tell you about yet. Let’s strip off those prices so that you could save some money on your first mortgage loan.
Firstly, you will need an itemized Loan Estimate. In order to deal with something, you should understand what it is. This document will be your protection from all the vague charges created especially to deceive innocent buyers.
Secondly, pay particular attention to the “Services You Can Shop For” section. Lenders like to charge extra for their friends providing such services as a title search, survey, and pest inspection. Keep in mind that you have complete rights to choose these services yourself.
Make sure you compare prices of the services offered by at least three settlement service providers. Also, call Geico, State Farm or some other local agency to compare insurance rates. Show your lender that you know everything about it.
Also, origination fee and underwriting fees are always negotiable. Therefore, make sure you ask your lender to waive or reduce the application processing fees. The lender earns enough on your interest rate anyway.
If your lender doesn’t want to do it, you can always use your trump card. Provide him/her with the Loan Estimate from the competing lender with lower lender fees. No one wants to lose a customer in the tough housing market.
Application fees is another one you can successfully get rid of. All you need to say is that you cannot afford this cost. That is how you will speed up the mortgage approval process.
Discount points will be another trick that will try to extract your money in exchange for lowered rate. Nevertheless, for the first-time buyer, it is usually better to leave extra money liquid. Apply for discount points only if you are going to live in the house for years to come.
You may ask your real estate agent to negotiate a seller contribution. Quite often, sellers can contribute a certain portion of the purchase price in order to cover your settlement expenses. It might fail but there is no sense in not trying.
Finally, the last thing you need to take care of requires your hawk eyes. You will receive the Closing Disclosure three days after closing. Make sure this document corresponds with your initial Loan Estimate. Otherwise, ask for the explanation of changes before you start signing anything at the title company.
Don’t let stress connected with moving day to force you to pay extra fees on your mortgage loan. Breathe deeply, look through the estimates carefully, and don’t give up. You’ve worked too hard for this castle to give away its key to the bank.