Closing Costs Are Negotiable?
Not only are closing costs negotiable, on the new GFE (Good Faith Estimate) they are most likely inflated to prevent the bank from having to make up the difference if they under quote. On most of the fees listed on the GFE, the lender is not allowed to raise the amount once quoted. Therefore they often will quote the highest allowable fee. There is also a difference in Registration fees from county to county. I recently had a lender quote $110 to register the deed, because that is what they charge in the area he is in, and in our area it is only $30. So buyer's don't be afraid to ask WHY?
Many customers don’t realize that closing costs are negotiable, mortgage experts tell The New York Times.
“There’s a lot of room for negotiation in the costs of closing and consumers should examine every charge and not hesitate to challenge them and try to bring them down,” says Barry Zigas, director of housing policy at the Consumer Federation of America.
Closing costs can really add up when buying or refinancing, running anywhere from 3 to 6 percent of the price of the property. For example, in 2010 the average closing costs for a $200,000 purchase rose nearly 37 percent to $3,741, according to Bankrate.com.
Many of the fees associated with closing are negotiable and consumers should review line-by-line estimates and challenge them.
Simply ask the lender which fees are negotiable and which are fixed to find out where there’s wiggle room. Questions such as “Who is getting paid this fee, and why am I being asked to pay it?” can start the conversation, experts say.
“It’s not a time to be polite,” says Kathleen Day, a spokeswoman for the Center for Responsible Lending. “You have to have a strong stomach and a stiff spine and not bow to pressure from the other side of the table to close the deal.”
Lenders are required within three days of receiving a loan application to provide an estimate of closing costs for buying or refinancing a home. Good-faith-estimate forms provided by lenders can be used to easily compare closing costs among lenders in shopping around for the best deal too.
Source: “Curbing Close Costs,” The New York Times (Jan. 27, 2011)
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