June 26, 2017
Getting a home loan involves closing costs. There really is
no other way around it. Buying and financing real estate means various entities
get involved at the behest of the mortgage company in order to keep the loan in
mortgage guideline compliance as well as provide necessary documentation and
information the mortgage company needs in order to make a decision about a home
loan. Some of these fees however can be negotiable while others not so much so.
Closing costs are divided into two basic categories- lender
fees and non-lender fees. Lender fees are those that the lender charges the
borrower for directly. A lender might require an underwriting fee. An
underwriter is the individual at the mortgage company who reviews the submitted
loan file and determines whether or not the loan meets the required guidelines
for an approval. A lender might also charge a processing fee which covers the
overhead of preparing the loan for submission to the underwriter. The lender
will collect money for a property appraisal as well as for a credit report.
At the request of a potential borrower, the lender can
provide a Cost Estimate which will list these lender fees as well as estimates
for non-lender charges. Can you negotiate these lender fees? In a way, yes.
However, lenders can’t waive a particular fee for one borrower and not for
another. If a lender waives a $400 processing fee for one but not for someone
else, that practice falls out of compliance. However, lenders can adjust the
interest rate on a particular loan and provide a closing cost credit that can
be applied to the borrower’s closing costs. Your loan officer can run these
numbers for you.
There are however non-lender fees that you might be able to
negotiate directly with the service provider. These services are listed on your
Cost Estimate and you have the ability to contact these service providers
directly for a quote and ask for a discount. You’ll need contact information
for various companies and it may take a little legwork but it is your money
after all and why not save where you can? There’s no reason not to try and
reduce your closing fees where possible.
For more information or questions about mortgage loans, please call (855) 757-8748.