CLOSING COSTS OUT OF CONTROL? Perhaps this New Site May Help! Well . . . Perhaps!

Dean: I've bookmarked this site because buyers are always asking me to estimate their closing costs and they don't want to hear "it depends!" Thanks!

With buyers now negotiating thousands of dollars in closing costs in sales agreements, info like this has value to sellers as well as buyers.  There are countless pages to initial and sign at a closing.  I wonder if most consumers are too overwhelmed or too embarrased to ask about all the charges. (God forbid we appear ignorant about such an important transaction.) As long as there's no fee for asking questions, I think it's a great idea to get more information to the consumers.

Dean.. I disagree with services and sites like this.  Theory... you drive prices down and at the same time, you will drive service and integrity out the window.  Some might disagree with this, but many very good loan officers will agree with this.  There are too many unknowns, especially in toady's market to shop mortgages just because a site does it for you.  And yes, imagine those that advertise on there... wondering if they get a piece of the pie.  Who would this cost?  hhhhmmm... maybe the consumer? 

Oh yea, And a paper endorsing this?  Let me give you a great example of this.  Here in my area, NBC in Philadelphia endorses Lending Tree and has it on the TV stations web site in the finance section.  And gives them a 10...  gold stars, etc, etc.  But many in the mortgage business knows how Lending Tree works and operates, especially those lenders that gets leads from Lending Tree....  it's a monopoly that is costly the buyer on several different avenues. All of this, just food for thought.

I am with Jeff! Often times clients will go to the lowest offer and end up with the biggest liar. We are in a market where you need a true professional to get the job done as I am sure you know. Encouraging folks to save money is good... just be aware you may be putting your commission on the line in doing so. When you are dealing with earnest money deposits and dream homes.. I would choose someone who can get the deal done.

In my market most homes sold right now are bank owed properties where the Buyers don't get a choice of title companies. I find this a shame in that the banks get a discount on their fees and then the tile company just gouges the buyer to make up their profit.

Experience should tell everyone this is just a way for the website owners to make income and they really won't care about the integrity of the data beyond what would cause a complaint. And please don't let me hear one agent moaning about a processing fees/lender-broker fees unless you want the full response about the liability (agents never have) the local and federal regulations required to be folllowed by the processor and the ridiculous series of events (agents not sending in a legible contract or copy of the earnest money, employeers dragging on getting back the VOE, HVCC companies taking 3 weeks to get back a crappy appraisal, etc x15).

"agents not sending in a legible contract or copy of the earnest money, employers dragging on getting back the VOE, HVCC companies taking 3 weeks to get back a crappy appraisal, etc x15"- to an infinite power... especially these days of super-extraordinary review. Well said Ken.

Dean, I'll submit you will never maximize your potential until you partner with a team that will cover all the bases for and with you. As a quality lender I explain each and every fee to all my borrowers. None of them wonder what the fees are for and know what range in fees to expect. Regarding my lender fees I don't claim to be the cheapest provider in town- do you claim to provide your services cheaper than any other agent in your market? I only strive to provide the best level of service in the industry while making a fair profit.

By the way, as a lender I review my HUD's with borrowers prior to closing and attend my closings as part of my commitment. I don't know any "internet" lenders being that service oriented and my customers are all relieved to have me supporting them when the "deal goes down".

Maybe that is what your customers should be looking for instead of the lowest fee...

Gerry Suarez, Jr.

Your FHA Loan Pro!

Dean...  I forgot to bring up my other point, that Ken did mention.  Yes, some lenders might charge more than enough fees... but you started to talk about certain fees.  Here is an inside tip...  every lender, and I mean every lender... bank, banker, broker, .. from Wells Fargo, to B of A, to a,b,c mortgage company... all have fees that they need to cover, expenses of doing a loan. It's part of their profit margin.  Some people like to list them all, some list a small amount, and others don't list any.  But here is the kicker, it will be passed onto the borrower one way or another. And if not in fees, in rate and points.  Something you forgot to mention. Yes, I will agree, some are much higher than others...  But just to shoot down the term fees and call all fees junk fees, which many do... they usually have no clue then.  You need to shop, but shop wisely. Sometimes when everything is too low, rates, points, and fees, it could come back to haunt you at closing. It's called bait and switch.  This is just my opinion of 16 years in the mortgage industry and working for the biggest, the smallest, and some in the middle. thanks

I just did a scenario on closing dot com and found theiur fees high.

Oh, Don't forget about the Real Estate Broker transaction fee.....

I'd have to agree with all the comments here.  Bait and switch abounds.  Even with a site like this, they have a vested interest in the outcome.  The lowest rate may be just that the lowest rate.  However, it very well may be the most expensive...bar none!  lowestrate.com could be equal to highestcost.com. 

HI Dean-

You have commented on my blogs before, so I thought I would return the favor.

There are companies LIKE COUNTRYWIDE, that sold "no fee" closing cost loans.  You and I both now how they did that...By running UP the interest rate to compensate.

I recently was told by a buyer that their bank offered them a loan at $300.00 in closing costs.  I laughed, and respectfully told her to have them provide me a Good Faith Estimate showing this....they couldnt, and she didnt.

Well, one thing that hasnt been mentioned in your blog, or in the thread, is WHAT EXACTLY is a closing cost.  People ask ME this all the time.  Is PREPAID INTEREST a closing cost?  So, if you close on the 15th, are the 16 days PREPAID interest a closing cost?? Is having to pay for 1 year of homeowners insurance up front a closing cost?  If a buyer chooses to pay a POINT up front to reduce their interest rate...is that a closing cost??

Every lender has a different perspective on this.  Also, and more importantly, every transaction can be unique as to the program and customer's financial situation.   Keep in mind, closing costs are EXTREMELY REGIONAL as well!  Recently, Lenn Harley was kind enough to send me a HUD1 Settlement form from one of her recent closings...Yes, with all the customer information blacked out!  However, I WAS AMAZED at the closing costs, BEFORE it even GOT TO THE LENDER!  In her area, there are wierd state taxes, county charges, and the TITLE COSTS were WAYYY out of this world!  I couldnt believe it!  It has NOTHING TO DO with the LENDER< or the REALTOR, that is just how it is in her area!

In addition, some lenders Charge a PAR rate, and then charge an origination fee to the buyer!  This give the BUYER a much much better rate...Some charge the "going rate", and then have normal closing costs.  After all, we dont do loans for free.  Just like a Realtor doesnt sell a house for free.

I think LIZ & MATT, the 1st two commentors, should have their LENDER PARTNER sit with them and the customer, and SEE how they go over all the #'s with them!  That way, they can either decide to change LENDER PARTNERS, or have a new found respect for what we as lenders do.

Here are ours, typical on a 200k Conventional Transaction.

Closing by TITLE COMPANY $200

Lenders Policy $175

Appraisal HVCC $360.00

Credit Report $22.00

Admin fees to funder like Wells Fargo $575.00

Flood Cert  $14.00

Tax Service Fee $84.00

Our company processing fee $325.00

County Recording Fees $52.00

Misc Title Co charges $60.00  (generally covers overnight of package, fax, email, and other charges for pulling documents etc..)

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Escrow is escrow, so taxes and insurance are the same with every lender.

Origination with our company is dependent upon RATE .  Or, a consumer can CHOOSE to buy down the rate via a DISCOUNT fee.  But, in many cases, this is a voluntary action!

I think the blog as a whole, opens up DOORS< and WOUNDS at the same time!  I can see why peoople would cry out for specifics on this...and think that should be mentioned!

Thanks!

Bucky!