When purchasing big-ticket items such as houses and cars, it is natural to do research and shop around for the best deal. However, many Americans tend to forget to use that same mentality when it comes to purchasing a mortgage loan.
The attorneys at The Mortgage Law Group want to remind consumers that entering into a mortgage agreement is one of the most important, if not the most important, part of buying a home. Consumers who take the process too lightly and go with the first lender they talk to can end up over paying thousands of dollars in unnecessary and/or hidden closing costs. In order to be a wise borrower, there are a few crucial aspects consumers should keep in mind.
way to try to avoid costly closing fees is to petition the seller to cover the closing costs, a practice that typically occurs when the real estate market is favored toward buyers. However, if that is not an option, there are a few other things consumers can do to get the best possible deal on their mortgage.
It is important to compare, shop and do research on different lenders before applying for any type of loan. Select a handful of lenders and then ask them to provide a list of charges associated with closing costs on a mortgage. If a lender refuses to provide a list of charges before the application is turned in, move on to the next one. A reliable lender will always provide a list of fees when asked.
After receiving the list of charges from the lenders, be sure to review each fee separately. Many times the fees can be disguised under misleading titles, which can lead to being charged multiple times for the same service. Also, be cautious of “junk fees,” which are often extraneously tacked on to closing costs simply to earn lenders an extra buck.
Some examples of “junk fees” caninclude: inspection fees, processing fees, warehousing fees, and underwriting fees. Many of these charges should already be included in the origination fee, or the fee lenders charge upfront to process a new loan, and the others are simply the lenders responsibility as a business. Also keep in mind that even if some of the fees cannot be avoided, it may be possible to negotiate them to a lower amount.
Most importantly, remember that as a consumer you always have a choice on which lender to go with. If you are not satisfied with the closing costs and conditions of a potential mortgage, ask for an adjustment. If your lender refuses to come to a reasonable mortgage agreement, find one that will.