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How Negative Closing Costs Work

Get Paid To Refinance: How Negative Closing Costs WorkIf you want to save money on your home loan, you might be thinking about refinancing your mortgage. You might be able to replace your existing mortgage with a home loan that has a lower interest rate. Even a single point reduction in your interest rates could save you tens of thousands of dollars over the life of your loan. Before you refinance, be sure to ask about closing costs. Because you are replacing your existing home loan with a new one, you may incur some closing expenses. On the other hand, you could also have negative closing costs. In this case, you might get paid to refinance. How does this work? 

The Lender Credit Exceeds The Loan Costs

If you receive a lender credit that is greater than the value of the closing costs, then you could get paid to refinance your home loan. For example, your closing costs could be $2,000. Then, your lender credit could be $2,500. In this case, you would get paid $500 for refinancing your home loan. Why would you receive a lender credit, and how can this exceed your closing expenses?

How To Qualify For Lender Credits

You receive lender credits if you refinance to a lower rate that offers a lender credit. For example, at the original home loan closing, you might have paid points to get a lower interest rate. With lender credits, the lender is paying you to refinance. 

If you qualify for a lender credit, there are several ways you might receive this money. The money could be used to prepay your mortgage interest, it could be placed in an escrow account to cover your homeowners’ insurance or property taxes, or could be directly applied to the principle of your home loan, reducing the amount of money you owe.

Always Look At Closing Costs During The Refinance Process

There are a lot of moving parts if you decide to refinance your house. Even though it may sound complicated, it could save you tens of thousands of dollars while freeing up additional cash. If you have owned your home for several years, it might be time to refinance. Reach out to a professional to learn more. 

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Major Mistakes Which Are Sure to Increase Your Closing Costs

Three Major Mortgage Mistakes Which Are Sure to Increase Your Closing Costs When shopping for a mortgage, it is important to take closing costs into account. While some closing costs are the same for all lenders, different programs may add or reduce some of the burden borrowers face when closing on a home loan.

Let’s take a look at some major mistakes that could result in borrowers paying more than they need to in closing costs.

1) Failing to Take Property Taxes Into Account

Property taxes are generally put into an escrow account that is established prior to closing on the home loan. In most cases, a homeowner will have to pay 12 to 14 months’ worth of property taxes prior to close.

This can represent several thousands of dollars or more depending on the property taxes associated with a property. While everyone has to pay property taxes, finding a home in a low tax area can significantly reduce the cost of closing on a loan.

2) Failing to Ask Lenders for Credits Toward Closing Costs

A lender may have a program in place that enables them to give a borrower a credit toward applicable closing costs. While this generally may not count toward the down payment, it can still be a significant help for first-time buyers or anyone else who may not have thousands in a bank account ready to pay for lawyers or titling fees.

Depending on where the property is purchased, there may be programs available that provide funding for those who promise to stay in the property for a certain amount of time.

3) Failing to Ask the Seller for Concessions

The seller of a property may offer up to 6 percent of any closing costs associated with the sale of the property. While a seller does not have to offer any concessions, they could potentially provide hundreds or thousands of dollars that may not need to be repaid.

In addition to closing cost support, a seller could also provide appliances or other items that can further save a buyer money during and after the purchase is finalized.

A home buyer can save a lot of money by taking simple and common sense actions. By doing research into cost saving programs and credits toward closing costs, those who may have felt that home ownership was beyond their reach may be able to achieve their dream. To learn more about closing costs, you may wish to talk to a mortgage professional in your area.

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What Happens at a Mortgage Loan Closing Meeting? Let’s Take a Look

What Happens at a Mortgage Loan Closing Meeting? Let's Take a LookSo you’ve found the perfect home, the seller has accepted your offer, and now you’re just waiting for the mortgage to close before you wrap up the sale and take possession. It’s time for the closing meeting.

But what does this meeting entail? And what do you need to prepare for it? Here’s what you need to know.

The Day Prior: Walking Through The Property

24 hours before the closing meeting, you’ll be given an opportunity to walk through the property and do a final inspection. During this inspection, you’ll be able to look for any damage that may have occurred between contract and closing, which means you can negotiate repairs with the seller.

It can be a good idea to schedule your closing date around the 20th of the month, so that if you do find any problems during the walkthrough, you can address them before you take possession.

The Closing Meeting: Title Insurance, Contracts, And More

Typically, the mortgage closing and the home sale closing happen at the same time. During your closing meeting, you’ll need to sign – and bring – a variety of documents in order to take possession of the home. You’ll want to ensure that you bring your good faith estimate, proof of homeowners insurance, contract, and inspection reports to this meeting.

You’ll also want to bring any and all documents that you sent to your bank as part of the home buying process. At this meeting, you’ll discuss the sale with the seller, the seller’s agent, the representative from the title company, the closing agent, the lender, and any attorneys that may be present. By the end of the meeting, you’ll receive a variety of documents, including a deed of trust or mortgage contract and a settlement statement.

You may also be required to sign a mortgage note, which is a note that states you intend to repay the mortgage loan. This note details the terms of your mortgage, including the amount of the loan and what action the lender is entitled to take if you miss payments.

A mortgage loan closing meeting doesn’t have to be complicated. Although there’s a lot that will happen at this meeting and there are a number of documents you’ll need to bring, a qualified mortgage advisor can guide you through the process. Contact your trusted mortgage professional today for a list of what you’ll need to bring and what you can expect to happen at your closing meeting.

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Trying to Save on Your Closing Costs? Here Are Three Tips That Can Help Lower Them

Trying to Save on Your Closing Costs? Here Are Three Tips That Can Help Lower ThemWhether you’re about to close on a lovely new house for your growing family or a stylish beachfront condo so you can retire close to the ocean, one thing is certain: you’re going to face a variety of closing costs. Insurance, taxes, financing fees, title fees, attorney fees and other costs will need to be paid, and if you’re a savvy buyer you’ll do everything you can to save on them.

In today’s post we’ll share three quick tips that can help you reduce your closing costs when you buy your next home.

Tip #1: Include Closing Costs in Your Negotiations with the Seller

As closing costs are a part of the real estate transaction they’re an excellent item to include in your negotiations with the seller.

For example, if you consider that closing costs might be 3 or 4 percent of the home’s value you can try to bring the seller’s asking price down to get those costs included. Or, you may be able to entice the seller with the prospect of a quick sale if they are willing to pay your closing costs in order to get you to sign on the dotted line.

Tip #2: Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage advisor to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

Tip #3: Ask About Every Fee You’re Required to Pay

Finally don’t forget that you’re the customer and that you have the right to know about each one of your closing costs and why you’re expected to pay them. Being informed about all of the various items in your transaction will help ensure that you’re not paying something you could have avoided.

There you have it – three excellent tips for reducing your closing costs when you purchase your next home. For more information and advice about mortgage closing costs and how to best manage them, be sure to get in touch with your local mortgage professional.

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Five Required Mortgage Closing Costs – And A Few Tips On How To Minimize Them

Five Required Mortgage Closing Costs And A Few Tips On How To Minimize ThemMortgages are expensive, and closing costs only add to the financial burden that homebuyers face. But with a little knowledge, you can pinpoint places to save on your mortgage closing costs and keep more money in your pocket. When you’re negotiating your next mortgage, use these tips to reduce required closing costs and keep more of your hard-earned money.

Title Insurance: Request The Simultaneous Issue Rate

Title insurance is an important add-on that no buyer should go without. At the time of closing, there may be a variety of title problems that could arise, such as like encroachments, easements, unpaid liens, and fraud. If a previous property owner wasn’t properly discharged from the title, they may have a claim to the property.

In the event that title ownership challenges arise later on, your title insurance will compensate you for any losses and expenses you incur when trying to prove your ownership. Buying title insurance may help you to avoid the hourly fees you’d pay a lawyer or notary to investigate your title. Typically, when you receive title insurance, you and your lender will each have separate insurance policies on the title.

You can minimize the out-of-pocket expense by asking the insurance provider for their simultaneous issue rate. This is a highly discounted rate that applies when both the borrower and lender title insurance policies are issued at the same time.

Origination Fees: Negotiable If You Have Good Credit

An origination fee is a kind of prepaid interest fee that you surrender to your mortgage broker when you apply for a mortgage. It only applies when you use a mortgage broker.

However, it’s not a mandatory fee for most buyers, even if they go through a broker. The purpose of an origination fee is to compensate the broker for the time and effort they need to invest to get your loan approved. If you have good credit and you can prove your income, then this fee isn’t necessary – and you shouldn’t have any trouble getting your broker to eliminate this fee.

Also note that an origination fee is the same thing as a broker fee. If your agreement includes both, you’re getting charged for the same service twice. Ask for one of them to be removed.

Mortgage Application Fees: Typically A Money Grab

A mortgage application fee is another common fee that you can usually avoid. This fee – which typically runs about $50 or so – is something your lender charges you in order to cover the cost of running your credit report. However, since banks and brokers order hundreds of credit reports every day, they can pull your credit report for next to nothing.

The $50 fee they charge you is, essentially, free money for them – and you can usually get them to drop this fee if you ask.

Underwriting Fees: Your Broker Shouldn’t Charge You For Underwriting

Brokers don’t underwrite loans – lenders do. That means if you’re getting your loan through a broker, you shouldn’t have to pay any kind of underwriting fee – it should already be included in the loan terms the bank set. It’s perfectly valid for a bank to charge you an underwriting fee, but ask your broker to take underwriting fees out of your agreement.

Courier Fees: Handling Documents Should Be A Standard Business Practice

One common closing cost is courier fees. These fees come in different amounts and go by different names. It may be $20 or $50, and it may be called a courier fee or a document handling fee.

Title companies might very well use couriers to send documents, but lenders most likely won’t, and $50 is excessive. Document handling fees are a standard cost of doing business, and that means they should already be included in the lender’s core billed services, not added as an extra fee. Use this argument when you ask your lender to remove the fee; they’ll likely comply.

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