Just Bought A House? Watch Out For Closing Costs
It's a good time to be a homebuyer..both with the tax credits and interest rates at historic lows. Housing prices have been falling dramatically over the last year and a half. At some point housing prices are going start going up again; so will interest rates. When this happens people might feel some regret for not buying now.
If you are taking the plunge and you're in the market to secure financing for a new home, it's a very good idea to shop around. Not just for the best interest rate, but for closing costs as well.
In years past, consumers showed up at the closing with almost no idea of how much it was going to cost them to 'close' the deal. Consumer advocates and government regulators have been critical of the process. Typically you were told to show up with your checkbook and be prepared to write up to a dozen checks and roughly it would total in the tens of thousands of dollars. Often you were required to sign documents you were reading for the first time.
The process is about to become a whole lot more transparent.
Starting Jan 1, 1010, the government will require lenders to give their customers a good faith estimate of the closing costs, upfront. This will be in the way of a form, called appropriately enough, a Good Faith Estimate form. There is also a new HUD 1 document. It too will go a long way toward de-mystifying the entire process of buying and closing on, your new home.
The costs for the settlement service providers, all the people involved in the transaction whether it's a refinance or a purchase; all the costs for their services, will be listed on the Good Faith Estimate and the HUD 1 statement. You will be able to make sure at closing, that the costs you see, match what you were given a month or two prior, when you first started shopping around for a lender.
So how do you compare costs among different lenders and different service providers? Do this by shopping around. Compare the prices the lenders quote you. Analyze them before you even consider finalizing an agreement with them.
This initial investment of your time could save you hundreds, if not thousands, of dollars.
Spend two hours time online or in person with three different lenders. Get a few different loan quotes, compare interest rates, points costs and underwriting fees.
Then go a little deeper and analyze the good faith estimate of closing costs.
Be aware which closing costs are fixed and which are negotiable.
Many of the costs at closing are negotiable. Some are not. Government recording fees, for example, and transfer taxes in New York, those are not negotiable. Flood certification is also required. Also the bank may want an appraisal and want to use their own appraiser. It is sort of a fixed cost but there is room for some negotiation.
But many of the lender fees, or origination fees, or underwriting fees, points, those are negotiable.
So is homeowner's insurance, it's negotiable.
And now title insurance is definitely negotiable. So spend the time shopping around.
" You can go do that a couple of ways", said Tim Dwyer, the CEO of www.entitledirect.com, a title insurance company. Dwyer says that up to recently, title insurance was not really negotiable. "it used to be that title insurance was something that someone involved in the real estate process bought on behalf of the consumer. Now it's possible to shop for it.
" You can google 'title insurance' or 'title insurance direct' or 'title insurance save' and really be able to shop. Also two websites that really allow your to shop for services and compare are www.closing.com and www.feedisclosure.com."
Entitledirect offers title insurance at a 35% savings to consumers and that could translate to hundreds, if not thousands of dollars, in savings.
Also Entitledirect will contact your lender on your behalf; coordinate with them over preparation of the documents, provide you with advice, and tell you what you will need at closing.
Everything is done online but they will send a representative to the closing who will sit with you and walk you thru the documents. They will also make sure that you have read all the documents prior to your closing. They have an online facility that allows you to do that. All of your documents will be stored online for your perusal.
So again, be aware of what's fixed and what's not. Shop around, compare, analyze, finalize.
www.hud1statementgenerator.com
IF YOU'RE BUYING A HOUSE AND ACTUALLY GOT FINANCING, CONGRATULATIONS!
BUT PAY ATTENTION TO CLOSING COSTS.
Comments: 1
And when you sell a house, watch out for closing costs!!!!!!!!!!