How to Find Hidden Costs in Your Closing Statements

During the closing process, you’ll be given a variety of documents in which at least one will be a government disclosure document, which is absolutely mandatory to have. It is meant to keep the buyer fully informed of any fees incurred during the closing process. You might also receive a HUD-1 Statement or a Good Faith Estimate.

However, there are some fees associated with the closing process that you may think cannot be contested. They are called hidden fees and can include:

• processing fees

• overnight delivery fees

• notary fees and more

Don’t overlook these fees and remember that you can question them at any time.

Understanding the Good Faith Estimate

If you are applying for a federally related mortgage loan, you’re required to receive a Good Faith Estimate. Its job is to give you an idea of the fees you may encounter during closing time. Always compare these fees to the fees on you HUD-1 Statement. With very few exceptions, all fees are paid at the time of closing. It is wise to question the fees on the Good Faith Estimate form even if you think it is too late.

Usually, the first charges listed on the Good Faith Estimate are items that correlate with your loan (appraisal fee, credit report fee, mortgage broker fee, underwriting fee, etc.). The appraisal fee and the credit report fee generally cannot be contested because it is ordered by the mortgage broker. However, if you have your own appraiser who can get the job done for less money, it is best to use him. Don’t let the lender tell you that you have to use an “approved” appraiser. More often than not, your appraiser can be approved simply by submitting proof of certification to the lender.

The broker fee is negotiable and is set between you and the broker when you apply for a loan. The underwriting fee may be negotiable as well, but lenders are generally firm in their rates, so don’t expect to negotiate a lesser price on the underwriting fee.

Negotiating Fees For Hidden Costs

The next charges listed on the Good Faith Estimate refer to the items required by the lender to be paid before closing and the reserve money required to be deposited with the lender. Always check and make sure the calculations were done correctly and that they match the quote you were given.

Other charges may pop up on the Good Faith Estimate. These include survey and pest inspection fees. These can be paid by either the Buyer or the Seller and is quite negotiable. If you do agree to pay them, make sure the number on the form is the exact number that you agreed to pay.

Title charges are usually the last set of fees to appear on the Good Faith Estimate. There will be a closing fee, a title search fee, and a title examination fee. You can speak with your closing agent about these and ask if they be reduced.

Taking the time to go over all of your documents to save a little money here and there may seem pointless, but it can really add up to some significant savings when you go to close on your home. $50 here and there may not seem like it would make much of a difference, but it all adds up in the end. You’re purchasing a home, one of the major investments of your life; it is worth it to go over your closing statements in order to save money. You’ll need that money later.