7/22/2011 4:50 PM ET|
Annoying homebuying fees to avoid
Credit report fees
Lenders have to pay for pulling your credit reports and scores. Your interest rate and terms will be based in part on what they find. But lenders typically pay less than what you would to buy your own reports and scores, since they get volume discounts.
Credit report fees "should be in the low two digits," Lewis said. When the lenders Bankrate surveyed charged separately for credit reports, the fees were typically under $25. If you're being charged much more, you should ask why. A higher fee may be justified if more than one borrower is on the loan (requiring that more credit reports be pulled), but a comparison with at least two other lenders' good-faith estimates will help you know if the fees are in line with what others are charging.
By the way, your credit scores won't be penalized for applying at different mortgage lenders, as long as you do so in a relatively short period. The credit scoring formula most mortgage lenders use, the FICO, lumps all mortgage-related inquiries together and counts them as one hit, as long as the inquiries are made within 45 days. Furthermore, the scoring formula ignores all inquiries made within the previous 30 days. Your best bet: Apply at different lenders on the same day, and make your decision shortly afterward, to minimize the impact on your scores.
Title insurance and related services
A title insurer researches your property to make sure there aren't any problems involving the deed. Then it provides an insurance policy that covers the cost of defending against any challenges to the title.
There are two kinds of title insurance: lender's policies, which protect the lender and are usually part of the mortgage deal, and owner's policies, which protect you and may not be required. Glink suggests you get both, but who pays for what can vary.
In some areas of the country, for example, it's customary for the seller to pay for most or all of the cost of the buyer's title insurance policy. In other areas, it's customary for the buyer to pay. If you're picking up the cost for both policies, the toll can be thousands of dollars.
Bankrate's survey showed that title costs averaged $993 in North Carolina but $2,811 in New York state.
You may be able to shop around for cheaper title insurance. In some states, tight regulation keeps the costs about the same, but it's still worth checking online title insurance quote sites.
Kristof did that on her refinance and wound up saving $787 by using a company named Entitle Direct rather than the title company her lender had proposed. When she recently purchased a new home, she saved an additional $1,267.
"It's extremely important to shop, no matter whether you're refinancing or selling a home," Kristof said. On her recent purchase, "the original quote was $3,645. The quote I got after 10 minutes of shopping: $2,378."
Even if shopping around doesn't land you big discounts, you may be able to get a break on the costs if you buy both lender's and owner's policies from the same company. Also, if you're refinancing rather than buying and have lived in the house for less than 10 years, ask for the "reissue rate," which should be lower.
Courier, postage and wire-transfer fees
That these fees even exist in an era of scanners, email and electronic funds transfers is kind of amazing, yet many lenders persist in charging them.
These fees do serve one important purpose. They can give you a quick idea of whether you're getting gouged.
A lender should be open to reducing or waiving these fees if they're being charged as part of the origination costs. If they're third-party fees, they should at least be reasonable and in line with what other lenders charge. Postage and courier costs typically average $55 to $75, the Bankrate survey found. If you're being charged $100 or more, that's a sign to start making a fuss.
Finally, to make sure there are no last-minute surprises, ask your lender to give you a form called a HUD-1 at least 24 hours before your loan is scheduled to close. This form lists all the fees you'll be charged and should closely match the good-faith estimate you were given at the start.
If not, start asking why. If you don't get good answers and the lender won't modify the fees, your greatest power lies in your readiness to say no.
"You have to be willing to walk away from a bad deal," Pizor said.
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.
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"Courier, postage and wire-transfer fees
That these fees even exist in an era of scanners, email and electronic funds transfers is kind of amazing, yet many lenders persist in charging them"
Final mortgage documents are certified, notorized and recorded documents, so no Liz they CANNOT be scanned or
emailed! This is why there are small courier and postage fee's!
Well on the appraisal end the Government Blamed tthe appraisers for the crash since they could not find anyone else that had no voice. They made a law so the lender could not even talk to the appraiser there must be a middle man. NOW Wells Fargo owns RELS which with the new federal law, a lender can not call the appraiser he has to call a third part, SO boom RELs charges people 750 for the appraisal they offer the appraiser 225. SO Bank Of America Formed Landsafe and do the same thing. The appraiser who most of which are honest hard working honorable people are starving. The ones with any diginity are saying no to the 225, so you wind up getting the worst appraisers who are just there to do a quick and often poor report. But that is what the bank wants, they make 500 . We are in such a mess. WE protect the bank, people steal money we let them walk, Tell me this who is the lead investigatior in the case of the 90 million bonus for the Fannie Mae and Freddi Mac boys.
America is the Greatest Country the World has ever seen, BUT if you think it is an auto renewable thing you are part of hte problem. We can Blame the Mexican or Mel Gibson but until we look at the Mirror we are headed to Hell in hand basket...Joshua Funrunnerstravel.com Single people who care
You missed the mark on this one. The mortgage industry has a new GFE which clearly points out the various costs of doing a mortgage. The originator/lender is now held accountable for many of the costs quoted even though they may not have any responsibility for setting those costs. That is why I only quote title/escrow companies that will guarantee their rates. What you need to know is that if I quote a company and the borrower shops and chooses someone else based upon what they may quote at the start and it ends up being more due to those same additional fees, waivers, endorsements, etc., I will not be held responsible for the difference. There really are a lot of errors in this article. By the way, my compensation in no longer tied in any way to the type of loan or the costs. It is based solely upon the loan amount so volume is now the key to success. If I want more loans, it is now ideal for me to make sure that the costs of getting a loan remains low so more people will choose to use me. In regards to your comments on appraisals, lenders can no longer choose to work with a particular appraiser. Appraisers are chosen by Appraisal Management Companies (AMC) and we do not get to even chat with them. Good luck on shopping around on that. It won't work. Gouging is really a thing of the past. Old information.
"Finally, to make sure there are no last-minute surprises, ask your lender to give you a form called a HUD-1 at least 24 hours before your loan is scheduled to close. This form lists all the fees you'll be charged and should closely match the good-faith estimate you were given at the start."
I guess you missed the government regulation that says if the HUD-1 is off by more than 10% from what the good faith estimate says, the lender has to pick up the difference and is not allowed to charge it to the buyer.
This is not the only mis-information you have happily provided to all your readers, and this is not the first time I have suggested you learn your subject BEFORE pretending that you're an expert.
Ask for a "good faith estimate" from the lender before signing on a mortgage loan. This should provide a list of all the loan fees.
FYI lenders can't pick the appraisers on conventional 1st mortgage anymore. And the only time I see credit reports cost more than $20 is when we have to go do updates because there are balances that don't seem legit we have to clear so the borrower doesn't have to pay them off or if something delays the closing to the point the credit report expires. Checking your credit regularly and correcting issues yourself before you try to get a loan will save you both time and money. Also, sometimes the lender has to pay for items you could easily provide yourself at no cost but rather than just provide the requested documentation peole like to argue and complain, so to avoid causing an "inconvienience" we just take care of it ourselves.
Always question fees you don't understand, but also understand business have to pay thier employees, their phone bills, their mortgage . . .
The fourth column in the chart below is closing costs. Notice how this financial institution uses higher closing costs instead of points in order to lower the interest rate. This is one of the "best finance rates in your area" that I get when clicking on the link in the article. The lender is not in my area (online bank I think) as a matter of fact none of the institutions listed were local.
I am refinancing my mortgage and got the 3.625% rate from my local bank for about $1300 in fees. Had to get an appraisal - tomorrow - cost is $350. Had to redo the title insurance too for about $500. I would be careful going with the lowest cost title insurance because title insurance is only as good as the company behind it.
This is my 7th mortgage or refi in about 22 years and I can't say I see a big difference in fees or paperwork that I did in the last week vs. 20 years ago. This includes my first house which we did with no money down and our second house for which we had to find financing the week of the first gulf war when many banks wouldn't even quote a rate much less give out a loan. Finally got one at 10.75%
I am not in real estate as a business; I am your average consumer and is from personal experience. The one major thing that folks need to steer clear of is the pre payment penalties. This can come into play on a home loan or commercial loan; from anywhere in my experience from two years minimum to the life of the loan. With an interest penalty of what ever is placed in the loan at the time of signing. I have seen 9%. This also can be the same in a commercial loan but the may also, last the life of the loan as well.
This fee is applied to the loan when you ether sell the property or Refinance the loan before the loan is payed off.
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MSN REAL ESTATE
Even those who don't like to shop are probably hitting the stores this month. Here's what to be on the lookout for and here's what to avoid.