Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

Step 4: Closing the Deal: Scour your all-in Mortgage Costs

June 23, 2016 at 12:00 AM

It takes a hefty wad of money to get a mortgage. It’s typical for all the fees associated with securing a mortgage—called Closing Costs-to add up to 2% or more of the loan. That’s a stiff $4,000 or so on a $200,000 mortgage.

Some very good news is that beginning in the fall of 2015 a new federal regulation requires lenders to give all prospective buyers a Loan Estimate within a few days of receiving a loan application. We have the Consumer Financial Protection Bureau to thank for this! The even better news is that this three-page document is very easy to understand; it’s a huge improvement over the confusing loan docs of years past.

The Loan Estimate means you can make an easy apples-to-apples comparison of mortgage options from different lenders before you decide which lender you want to work with.

Not all the fees are mandatory; you should try and negotiate some fees down or get them waived. This annual Closing Cost survey breaks down fees by state. It’s worth comparing your regional norm to what a lender is proposing on the loan estimate, and challenging anything that seems out of line.

What To Negotiate:

  1. Origination fee. Some banks charge a fee to make the loan. This is typically a percentage of the loan amount. Say 0.5% or 1%. (This is separate from discount points you can opt to pay to reduce your interest rate.) 
  2. Home Insurance. If you’re a first-time buyer be sure to do your own shopping around for a policy; chances are you can do far better than a “forced” policy a lender provides.
  3. Escrow for Property Tax and Insurance. Some lenders will insist that you prepay these costs to them and they will handle the payments. That’s more typical with lower-down payment loans. I don’t like this at all. First off, you’re prepaying. Second, I want you to be in charge of these payments, so you can be 100% sure they are made on time. See if you can get this requirement waived.
  4. Title Insurance. There are two types of title insurance: one protects the lender and one protects you. And you pay for both. Your lender will typically work with just one provider; but there’s nothing stopping you from shopping around for a better deal from other title insurance companies.

Hold onto your Loan Estimate. At least three days before your mortgage deal is scheduled to be completed-called “the closing”-the lender must send you a Closing Disclosure document. This will have all the info from the Loan Estimate, plus some additional information. You should carefully compare all the costs and challenge any fees listed in the closing document that are now higher than what was listed in the original Loan Document.

Tag Cloud

comparison shoppingCredit Card Interest Ratereduce interest ratefinancial argumentscostly insurance mistakeInvest for savings growthSuze changed my lifeunexpected expense3% debt transferred home buying budgetpay 100% cashno tax on withdrawls10% donate to charityLong Term Care Insurance too expensive schoolLTC shoppingiffy incomeStaffords this year have a fixed 6.8% interest rateinitial tax break Federal Reserveno private loanPrime Rate Rise 2015yours, mine & oursspeak new goaldon't derail retirement savingsCombo Insurance Productsget health insurancedear suzetraditional vs roth 401(k)Inflation Benefitfile taxes quicklyBeautyhome related tax break bonus buy home you can affordCiti Simplicity Card long-term care HSA tax savingsRevocable Living TrustFederal Funds Rateis it true? low down paymentget the most out of social security be good example401(k) ContributionsallowanceThe Suze Orman ShowHeartcredit utilization rateno late fee FinancialIRA contribution gifted moneyGay Rightsno splurge New York Lifewaive home inspection biddream schoolpay high rate off firstplanSpendingdon't blow tax refundstudent loan debtshort term goal couple financesSatisfyingmanage student loans20% equitykeep a schedulebest interest rateslearn good financial choicesdo not pay allowance for good behaviordon't ignore open enrollmentMass Mutual20 year level term debit card10 year repayment plan Final Goodbyelower ratecar loanPhyllis Shelton expert long-term careapproved medical 100% tax-freedon't extend mortgage higher monthly paymentlive below your meansuniversal college accessspecial saving accountfull retirement agekids schedule paymentsbad decisionsdeath benefit needs for familygift grandchild IRA contributionETF'sSelfishlower premiumfinancing car better loan rateseliminate credit card debtgraduationLegal Guardianback door Roth IRAcompare monthly expensesdon't spend increase retirement contribution ratefocus on new truth healthy aging lousy investmentCOLApermanent life insuranceterm life insuranceoverspend on nights outget over life insurance phobiarequired disclosurelow credit scoresave store credit cardscredit managementrolloverpay interest while in schoolFICO credit score credit card mortgagestandard ratedon't charge a penny30 year mortgage college graduateVital Documentsfour steps to retirement savings home buying seasonconfidentquick closingwomen outlive menraise your deductibleoverspend on giftssocial workFederal PLUS loanTeachARMheartacheFinancial Cliffaffordabilitybill paying prioritiesincreased auto insurance premiumsocial security not going brokeretirment savingsrefundmax benefit coveredmax employer matched 401(k) contributionswitch to roth 401(k)shop online guaranteed level term policyUniversity of Illinoisswitch to spouse coverageroth iragrandchild summer job IRA contributionwomen live longerlife insurance name trust as beneficiarypay more than minimumhome budget after tax costinsuranceAARP Social security calculatorForeclosureFinancial SystemSelectQuote.commortgage interest tax deductiondon't cover cosmetic dentistrySwap Older Annuities or Life Insurance paid in fullearn allowanceemployer funding HSApremiumaccelerate dental workcut monthly cable billcost of capitalization calculatorraising mortgage rates 740 credit scoreEric Dodge protect your familyWashingtonRevocable Truststudent loan repayment planmaintain standard of livingsame sex marriage band end Floridawrite new goalHolidayRichearn more on savingshome ownershipGift2015 record year car salesretirement planignore 6 month grace period cut monthly cellular billage appropriate choretax ID theftopen enrollment review zero rate transfer dealsSuze Orman spouse Kathy Travisstudent loan repayment estimatorHoliday Season15 year mortgagerising home pricesFiscal Responsibilityemployer offered life insuranceenjoy saving financial independencebest loan deal charges on credit cardautomatic paymentbe true to yourselfwomen longer life spandon't defer interest paymentscar buying mistakesage appropriate goalsannual cost of living adjustmentHDHP's are not bad401Koverspend on dining outautomatic withdraw to savings buying a carpublic service loan forgiveness programone annual feeMortgage Credit Availability IndexSuze approvedDurable Power of Attorney for Health CareWall Streetraise insurance deductibleCollege of Veterinary Medicinefederal student loan deferment same-sex marriagepay down student loan debthealthy teethone credit cardreduce withholdingLTCpush yourself to save more for retirementstrained relationshipnear historic lowsbecome member Long Term Care premiumsbe kind to yourselfsidelinedmarriage financial responsibilitySuze Orman Scholarshipthree year car loansave moneyrepay student loansAARPfinancial goal phrasemake saving a pleasurelong term goalmobile appPBS SpecialForbesbuy homeletter to suzeinsurance mistakecostly legal loan necessityanticipated salarycredit cardget credit cardgift up to 14,000meet monthly face your financial fearretain separate credit cardsHigh Credit Scoreno retirement funds for down paymentraise deductiblespaying for collegemultiple lenderscredit unionBankFederal Stafford loanautomate student loan paymentsbad retirement planningstudentpay down car loanno life insurance financially irresponsibleUrbana-ChampaignCNBChigh down paymentHDHP Financial AwarenessFree Debt Eliminatorleave a legacyhealthy retirement weightBaby Boomerscommunity bankJose Rodriguezadult children2016 adjust withholdinghigh FICO scoreunder 18 financial giftholiday spendingfinancial fearsborrowing plan School of Social Workvalue moneyproperty taxclosing costs 2% of loanFinancial Gift Cliffincrease emergency savings8 month safety netincentives for health care wellness screeningbig results AccuQuote.comGraceclosing feesSuze is my biggest mentorbuy down is it kind?adjust allocations percentage of women widowed 75-84dental insurance derailed planprescription tier20% down paymentlowest cost fund optiongrandparent IRA contribution real estate mistakesInterestaffordable premiumis it necessarycommunity collegelower mortgage interestverify retirement plan with HR or plan sponsorretirementCory Bookernew carresponsible with moneyreferrals calculate dependents annual income needskid borrow firstBill and PennySandy Hook PromisePost-Divorcehome buying mistakesRetirement Incometitle insuranceemergency fund savingsbetter loan dealsescrownon conventional route2015 financial roadmapLTCi ASAPinsurance yearly reviewloved ones dependent on incomeloan big picture FRAtax refund fraudmonthly dental insurance premiumno waiting periodmoney vowsdoctors in networkstay positivePersonal FinanceExhibitionteach your child good money habitsdental discount planInfluential Celebritychildren under 18dangerous money seasonSuze Ormanstaycationwives should be involved in retirementFinancial Power of Attorneynot gender specific negotiate points with bank or seller2017 Taxesdo you need life insuranceritual scheduleCredit Card Rate Increaseat worst still pay 75% benefitincrease retirement savingslong term caremortgagerefinancefinancial concernchildren's book4 Must Have Documents cnbc alarm clocklow-cost index mutual fundbetter termspay off debtFixed Rate Mortgagehighest possible benefitback-to-school budgetis it necessary?high premiumsGiftsraising interest ratesAmy Lacyetdental savings planEmployer Matched Contributionlow mileage discountstudent loan repaymentsocial security never insolventsuccesslet them have 50% controlhousing marketprovider of financial supportpeace of mindsmall changes no sneaking in feessocial securityshorter payback periodexercise reguarlyStudent Debt CrisisFundsidentity theftfamily save at least $100 monthlyhome loan credit score below 740 3 bucket approachcar leasingno interestallowance tasklife insuranceburn outVeterinary Schoolmoney-aware childhome insuranceconfident of solutionSave Us Moneydebtorigination feesEmergency SavingsRoth 401(k)percentage men widowed 75-84replace permanent life insurance with termAlarm ClockTelepicturesspring summer financial aidLovehealthy youSuze Orman's Money WarsMoney Marketpowerfulstandard deduction HDHP's are good for youDeath Benefitno fee transferalternative FICO scoretake actionOne Wallet At A TimeStudent Loanhealthy retirement blood pressureChanging LivesFinancial Solutions For Youmax employee matchWillteens and moneyRetirement Savingsterm insuranceschool co-sign ARM Cautionschedule vacationtelevision hostdon't buy wantsMoneycontribution women long term careFHA loan feesSandy Hook Elementary School50 over 50credit reportbudgetCivil Rights6 month waiting periodbreakdown projected monthly housing costdepreciating asset january billsemergency fund University of FloridaFICO ScoreUS Tax CodeGoodbyeadd teenConventional loan PMIFinancial Educatorpublic service career student loan repayment marriage inequalityonly refinance if it paysjuggle multiple financial goalsgay marriage ban end Florida lower interest ratesetup automatic savings withdrawlong-term care premiumscollege studentinterest capitalizationHDHP/HSAitemized deductiondeath benefit 20 to 25 times annual incomeMarlo ThomasCPI-WNewtownvalentines daytaxeslower overall drug costprotect dependent no apologyhigh deductible health care planMinor Children Pay Off Debt Before RetirementForbes Top 10rent vs buymental healthFinancial Awareness Video Festivalfile asapovercome financial fearsteach importance of helping othersOverspendingdangerous retirement planCommunication Skills unsubsidized Stafford loanloan no longer than 36monthspaid vacation8 RulesCommencementphysical health3 step financial road mapdoctor no longer in networkresponsibleMotherprotect and provide for minor child not enough life insurancesecured cardYoung Adult Ashley Springercreate new truthrequire chore in exchange for allowancepoint cost offset by savingsteenscommitNew american Dream Financial AdviceHow To Build CreditEasy Life Insurance know before you owehigh credit score discountbalance transfer interest on student loans15-year refinance deal20 to 25 times annual incomecontribute household expenses workaholicborrow each year, capitalization is going to pile up worst financial mistakewould you decline a bonusmonthly benefit retirement accountsfraudulent returndon't do five year car loan2016 adjust estimated taxHoliday Shoppingverify wellness screening and programsonly offered while employed 19 years cash flow problemstretch out haircut appointmentsHDHP's20% down payment avoid feesno negativitycan you afford itMust Have Documentsfocus on needsavoid burn outno private loansAmericans don't use all paid vacation timeLifestyleBankruptcyWarner Bros Television Grouphealthy gumsadvice for college graduatessummer job match income InfluentialsAuto Savings !00% tuition paididentity fraudconsider roth 401(k)savingsmortgage disclosureHigh FICO Score = Better RateMoney-Savingreduce monthly paymentpurely financial standpointeight month living expense 3 savings buckets don't use allowance as bribebuying car 2016ultimate compounding giftFICO at least 720debt freeStock Investmentssavings pleasurepositivesecure creditclosing disclosurehigher insurance deductibleCredit scorepreexisting condition not coveredGay CouplesMost Influential Celebrities Listreal estate marketCD'sPrime Rate Increaseprotect loved ones loan is giftAdequate Auto and Home Insurance8 month emergency fundmortgage brokerpay credit debt ASAPemotional stakescompare provider pricing40% toward financial goalStudent Debtgift not loanpresident ObamaLong Term Care shoppingalways use all paid time off

View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel