Many homeowners overlook closing costs when shopping for a mortgage or home equity loans. If you do this there is a good chance you will overpay this expense. Here is what you need to know to avoid overpaying at closing.
Closing costs can quickly add up to large sum. Once the lender and the title company add in points, title insurance, and administrative fees you will be required to pay thousands of dollars to close. Your total closing costs depend on a number of factors; some of these are subject to negotiation.
Overall your closing costs should not be greater than five percent of the loan amount, not counting your down payment. Application fees and loan origination fees are paid to the mortgage lender and are a negotiating point when shopping for a loan. You may also be required to pay the interest due from your closing date until your first monthly payment; closing on the last day of the month will save you this expense.
When you shop for a mortgage loan make sure you compare the closing costs using the Good Faith Estimate provided by lenders. Many homeowners make the mistake of comparing mortgage offers based on the Annual Percentage Rate (APR). The APR is a good starting point when comparison shopping but it does not factor in these closing costs.
Your goal for closing cost on your new loan should be around two to three percent if possible. Negotiating with lenders will help you reach this amount. You can learn more about saving money on your mortgage or home equity loan by registering for a free mortgage guidebook.
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
Claim your free guidebook today at: http://www.refiadvisor.com
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