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Closing Costs

Closing costs are the additional fees and charges that are applied to a loan on closing. Many home buyers worry about these costs and feel that some of these extra costs are suspicious, at best. Several investigative reports have proven that some unscrupulous lenders charge extra costs and hidden fees that are far from fair. In many cases, homebuyers are excited about buying a new home or about refinancing and do not take the extra time to check all costs. Many borrowers also are not aware that they can negotiate closing costs and assume that an extra $500 in fees is just not worth risking a deal for. Under federal law, lenders must supply borrowers with a good faith estimate (GFE) within three days after application for a loan is filed. The GFE must detail all charges and costs at closing. The problem is that no lenders need to supply this estimate of closing costs before the loan is applied for. When borrowers are looking for a lender to do business with, then, they have no way of comparing different lenders before signing on the dotted line. This does not mean that you need to be the victim of closing costs, though. Whether you are applying for a debt consolidation loan, a bad credit loan, a home equity loan, a bad credit home improvement loan, a new home loan, or any other type of financing, you can take steps to keep your closing costs down. A good first step is to ask for a written estimate of closing costs when first shopping around for a bad credit loan mortgage, second mortgage, new home loan, or other loan. While some lenders will refuse, many will want your business and will submit estimates of closing costs so that you can compare these expenses before committing to a lender. Next, do not be afraid to ask about closing costs and do some sleuthing. A good lender will be able to explain each of the closing costs they charge. Do not be railroaded by vague descriptions of charges – ask specifically what each cost covers. Then, make sure that you are not being overcharged for anything. It is normal for lenders to charge you for title searches, legal fees, appraisals, credit checks and title insurance, but make sure you are not paying too much for these items.

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