Prevent Closing Cost Surprises

So you’ve found that perfect house in Silver Spring, or Rosemary Hills, or Rock Creek Forest, and you’ve secured a great low mortgage rate. But there may still be something that takes you by surprise: high closing costs. There are over a dozen of these fees, such as credit reporting, appraisals, and document preparation, that can cost borrowers from $1,000 to $3,000 on a $200,000 mortgage.

Whether you’re refinancing or buying, there are ways to lower or even avoid some of these up-front fees, says CNNMoney.com.

Check with Your Current Lender

Since you already have a relationship there, all your critical information is on file. This could streamline the lending process, eliminating extra paperwork for applications and appraisals and the fees that go with them. If you’ve recently refinanced with this lender, you can ask them to request a reissue rate for title insurance to save up to 50 percent on this fee.

If you’re buying a new home in the Bethesda-Chevy Chase area and you’ve been a good client with your current lender, they might give you a better-than-market deal.

Negotiate When Possible

Lenders must provide a good-faith estimate of closing costs within three days of your loan application, but many will provide this prior to applying if you ask. This will let you see what kind of closing cost fees you’ll be paying and allow you to possibly negotiate for a better deal—especially if you’re a good credit borrower.

Remember, though, that lenders don’t control a lot of the closing cost fees, and the estimate won’t include some required costs such as state mortgage taxes, homeowners insurance, and property taxes.

Consider the Big Picture

While it makes sense to pay attention to closing costs, remember that your first priority is to get the lowest interest rate possible. If you can pay 5.5 percent versus 6.0 percent on a $23,000 30-year loan, even if you have to pay slightly higher closing costs to get the lower rate, it’s worth the additional money for what you’ll save in the long run.

Up-front closing cost fees can vary from lender to lender, and are not guaranteed. Some lenders and their vendors will even add or inflate fees just as a transaction is closing. The government has been working on regulations to simplify the mortgage process and save consumers up to $1,000 in fees, but it could be years before this rolls out. In the meantime, following these strategies could help keep a little more money where it belongs: in your wallet.

Contact me, Mynor Herrera, today for expert help buying or selling in the DC, MD, & VA areas! I also specialize in Bethesda and Chevy Chase, as well as the sub-divisions of Rosemary Hills, Rock Creek Forest, East Bethesda & Whitehall Condominium.