Insurance

You have researched diligently, and you have found the best mortgage rate available for your home purchase or refinance. Congratulations! Now comes your next task: analyzing and minimizing your closing costs.

Closing costs are the array of fees that are added on to your loan that cover various requirements for closing (such as title insurance). They can add up to several thousand dollars to your loan, so you want to take a good look at them and see where you might be able to negotiate a fee down, or even out all together. Here's how to do it:

• Make sure you get the closing costs on a "Good Faith Estimate" (GFE) form, rather than a less formal estimate form, because by federal law, these have to be accurate and if there are significant increases at the closing, the lender or broker may have to pay the difference.
• Go over the GFE with an eagle eye and ask for an explanation of each fee; don't accept vague answers as this is probably a sign that a particular fee was not really justified.
• Certain services can be packaged into the closing fees, such as appraisal, home inspection and termite certification. Some of these you may already have had done and paid for separately; make sure you aren't paying for them twice!
• The lender or mortgage broker usually has a title company they use for title search and insurance, but you don't have to use them if you can bring your own title documents to closing. Ask the lender for the "fee sheet" that spells out the costs of the title insurance they provide, and use that to comparison shop on your own. If you already own a home, check with the title insurance provider from that mortgage and see if they can offer a reduced rate for the return business. Call around to other local providers for their best deals.
• Watch out for so-called "junk fees"--these can show up under names like "Lender's Inspection Fee", "Commitment Fee," and "Assumption Fee". These are meaningless charges that pad the profit for the loan originators and calling attention to them and questioning them can often get them removed without comment.
• Closing costs are finalized on the HUD-1 form that is part of the closing documents. Request a copy of this several days before closing and make sure that it lines up with all the changes and reductions you negotiated on the GFE, and do another comparison before officially signing the form at closing.
• If you analyze the closing costs carefully and negotiate calmly and firmly, you may find yourself leaving your loan closing with a few more dollars in your pocket!