Reduce Mortgage Closing Costs - Little Known Secrets To Reducing Mortgage Fees

Reducing Mortgage Closing Costs
Little Known Secrets

Mortgage closing costs, mortgage broker fees, mortgage points, loan origination fees, discount fees, buy down fees...shall I continue? And don't forget appraisal charges, credit report costs, review, processing, and underwriting fees.

Please don't feel overwhelmed. I'm going to simplify Good Faith Estimates right now and reveal little known secrets to becoming a savvy mortgage shopper. You'll see! It's easy to compare mortgage fees.

Kate Understands Mortgage Closing Costs

Hi, my name is Kate and I'm a retired mortgage broker. I worked at banks and mortgage companies, finally owning my own brokerage. I helped thousand of people borrow millions of dollars. I used little known secrets to understanding mortgage closing costs and taught my clients how to compare mortgage fees.

Now I've created Get Your Best Mortgage Rate to share with you these secrets that benefited my mortgage clients for more than 20 years.

How To Compare Good Faith Estimates

The U.S. Government requires lenders to use Good Faith Estimates to disclose mortgage closing costs. Once you understand the content of good faith estimates, you'll become a savvy mortgage shopper. Comparing mortgage fees will be easy.

5 Terms

Loan amount
Property value
Interest rate
Mortgage length
Mortgage type

Good Faith Estimates start with the loan amount. Next is the purchase price, if you are buying a home, or the value of your home, if you're refinancing. Then the current interest rate is quoted. Last is the length of a specific mortgage program, for example, a 30 year fixed rate mortgage.

4 Types Of Mortgage Closing Costs

Lender and mortgage broker fees
Escrow, attorney, title and other third party fees
Interest rate
Mortgage insurance
Taxes, homeowner's insurance and prorated interest

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Pay close attention to lender and mortgage broker fees which can vary considerably on Good Faith Estimates.

Escrow, attorney, and title charges should be pretty standard, regardless of the lender, since they are 3rd party charges. Mortgage insurance is usually required by most lenders to allow for less downpayment.

The final items, called recurring costs, pertain to property taxes, homeowner's (sometimes called hazard or fire) insurance and monthly interest. Recurring costs, like 3rd party fees, won't differ much regardless of the lender. That's because they are mainly influenced by your property.

Mortgage Broker Fees, Mortgage Points
And Mortgage Fees

Mortgage closing costs, mortgage broker fees, mortgage points, loan origination fees, discount fees, and buy down fees are synonyms for mortgage fees. They're directly related to the cost of your mortgage interest rate.

A Reader asked me about points and whether they are just a bank's gimmick. Find my illustration at Best Mortgage Advice on Buying Points.

Think of playing with balloons when you were a child. Squeezing one end made the other side bulge. Just like a balloon, the lower your mortgage interest rate, the higher the mortgage fees. Conversely, the higher your interest rate, the lower the mortgage fees should be.

So use common sense and ask questions when reviewing Good Faith Estimates. Pay attention to mortgage fees when comparing interest rates. Decide whether lower mortgage fees or lower interest rates are the most beneficial to you. Here's more on how to compare mortgage interest rates.

With less than a 20% down payment, borrowers pay mortgage insurance to cover the lender's risk. Ask if it's tax deductible and how to get the mortgage insurance eventually removed. Also question your lender for alternatives to mortgage insurance.

Most mortgage companies charge for appraisals and credit reports. Many states allow only the actual amounts to get charged to borrowers. Again, ask your lender for clarification.

Beware of review, processing, and underwriting fees. These are often disguised as mortgage fees and can add hundreds, even thousands, of dollars to your mortgage closing costs.

Impound Accounts And Recurring Closing Costs

Some home owners include their property taxes and homeowner's insurance in their mortgage. In this case, borrowers are required to create a cushion, an impound account, for the lender. Lenders are then responsible to pay the county taxes and insurance premiums when due.

Other folks prefer to pay their insurance and property taxes separately. Ask your lender if this creates an extra charge. By the way, whether or not there's an impound account, the borrower chooses the specific insurance company.

If your mortgage transaction closes near the end of the month, there's normally less prorated interest. But you might also consider closing earlier in the month to avoid that end of month rush so familiar in the mortgage industry. Most home owners appreciate that the first mortgage payment isn't usually due for an additional month.

Kate's Mortgage Rate Lock Guarantee

OK, I have one last important point, perhaps the most important of all. Until your interest rate is locked, your mortgage closing costs can still vary. And when it comes to locking in your rate, I like to say...A bird in the hand is worth two in the bush. So if in doubt, LOCK!

Here is more on Kate's mortgage rate lock guarantee.

Now is a great time to get a mortgage. Don't miss out on these great rates. You know what I say, it's your home and your mortgage. You deserve the best!