Mortgage
Closing Costs
I want you to be an informed
consumer, because if have the facts, I'm confident you will choose me
to be your Loan Officer.
Money
needed to close your purchase falls into three general categories:
- Down Payment
- Closing Costs The cost of title, recording,
appraisal, credit report, lender fees, etc.
- Pre-paids This category includes items that are
the day to day expenses of home ownership, for example
homeowners insurance, real estate taxes and mortgage interest.
Some of this money goes into your escrow account at closing,
some of it may be used to pay a partial months interest, and some of
it may be paid to the seller to reimburse them for real estate
taxes they have paid in advance. Since escrow accounts are federally
regulated, the amount of Pre-Paids you pay will typically not vary
from one lender to the next. For more details on pre-paids see
Escrow Accounts for Taxes &
Insurance
Sometimes when people use the term "Closing Costs" they mean both
#2 & #3 above, and sometimes they mean only #2, so be sure to
differentiate between these two categories when you are discussing
"Closing Costs."
If you are shopping for the "best deal" by comparing preliminary
estimates of closing costs (#2 above), you have a difficult task ahead
of you, but let me try to give you some insight:
- Mortgages are one of the few products for which you
negotiate the final price after you make the decision of which
company to go with. Maybe not the very final decision, but
it's difficult to change mortgage companies after you receive a
pre-approval letter from a lender and have your purchase offer
accepted. It's impossible to change lenders if you get a surprise at
the closing table and don't want to delay your closing.
- Closing cost "estimates" are just that, ESTIMATES, but not all
fees need to be estimated. The lender fees can be and
should be given as a firm quote and not as an estimate. I
have heard horror stories of Lender closing fees quoted by other loan
officers to be as much as $1,200.00 lower then the actual costs the
buyers were charged at closing. The applicant originally thought
they were going with the cheapest Lender only to find out at closing
that the fees were actually significantly higher.
- Some
of the fees you pay to close your loan are out of the control of both the Loan Officer
and the Lender. Those costs are determined by the Title Company, the State of Minnesota,
the Real Estate Company,
and
the County in which the papers are going to be recorded. No matter what
figures the Loan Officer estimates for the "non lender established fees,"
they will cost you what ever the Title Company, the State of Minnesota,
the Real Estate Company and
the County charge. Some Loan Officers have been known to under
estimate the non-lender fees up front, so it appears to an
uneducated borrower like their Mortgage Company is offering a better
deal, when in fact the non-lender fees are actually higher.
- When evaluating closing fees, the fees to compare are the ones
that are established by the Lender, or the Loan Officer. They
do not have to be an estimate, but can and should be a firm quote. To determine how your costs will vary from one mortgage company to
the next, you must compare one Company's Total Lender Fees to
the other Company's Total Lender Fees. There is no
reason for Lender Fees to be Estimates and there is no reason
for additional Lender Fees to show up at closing. These
specific Lender Fees may
include, but are not limited to:
 | Loan Origination Fee (Typically one percent of the mortgage
amount) |
| Commitment Fee |
| Underwriting Fee |
| Processing Fee |
| Document Preparation Fee (Conventional Mortgages Only) |
| Application Fee's that
are an extra cost and not given back as a credit at closing |
| Tax Service Fee
|
| Mortgage Broker Fee |
| Points |
A good mortgage shopper will total up all of
the lender fees, ask for a firm quote on the total of these fees,
and then use that total Lender Fee Guarantee as part of your
comparison between mortgage companies. Cheap lender fees
should definitely not be the only basis for your decision, but you
should at least know up front how much you will be charged by the Lender.
I have personally designed a custom computer program to help me
calculate very accurate costs and I pride myself in the accuracy of my
closing cost estimates. When given the
sale price, mortgage amount, real estate taxes, homeowners
insurance cost, and closing date, my estimate will most often be
just slightly higher then the actual cost paid at closing. If
you also get an estimate form another Loan Officer, I hope he or she
will also give you a diligent estimate up front, and not just the low
figure we all know you want to hear just to entice you to work with
their company. Ask for and compare Guaranteed Lender Fees.
I'm sure you will feel good about my fees.
Cost is important, but it should not be the only criteria when
choosing a Loan Officer. I want you to be a smart shopper,
because if you are, I am confident that you will discover that I offer
fast, simple, stress free service AND low rates.
I can provide you with a very accurate estimate of
down payment, closing costs and , pre-paids and a monthly payment, but
I need some
information in order to make accurate calculations. Just
follow one of these links for a detailed "Good Faith Estimate of Closing
Costs.":
Request a Good Faith Estimate of Closing Costs
for a PURCHASE or
Request a Good
Faith Estimate of Closing costs for a REFINANCE
If you prefer, feel free to call me at (952)
253-7250.
Be sure to also review:
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