PARAMOUNT MORTGAGE - LENDER'S BLOG

June 23rd, 2009 11:41 AM
Educate yourself about closing costs

Reported by Kathy Canavan, USA Today

June 12, 2009 - In a national ranking of average lender closing costs charged to borrowers in the U.S. and major markets, Missouri has emerged as one of the lowest.

The figures compiled by Bankrate.com and published by USA Today shows Missouri near the bottom in the 53rd slot with an average closing cost of $2,758. The top leader, New York City soars to $4,015, followed by number two Texas at $3,975. The list of 55 has a median closing cost of $3,086 with the lowest cost in North Carolina at $2,650.

While the figures are interesting, reporter Canavan reveals an important fact about borrowers, "half the mortgage applicants in a 2007 Federal Trade Commission study could not identify their loan amount on settlement forms." Closing costs - fees paid at settlement - can add up to thousands of dollars, yet the costs and settlement process is a mystery for many borrowers.

Norm Miller, academic director at the University of San Diego's Burnham-Moores Center for Real Estate, says the savvy borrower will walk into the mortgage office with pay check stubs, recent bank statements, two years of tax information and a printout of stock account numbers and cash-value insurance accounts.

"I'm going to come in with everything I can to make it easy for the lender," stated Miller. "That's not only going to speed everything up dramatically, but you'll probably be considered a more sophisticated buyer, and they'll be fairly upfront with you." A 2008 Urban Institute study showed lenders appeared to make lower-priced offers to borrowers who seem more familiar with market terms.

Bart Shapiro, deputy director of the U.S. Department of Housing and Urban Development's (HUD) RESPA office, which regulates settlement procedures, offered a few tips for consumers:

Seek advice. Talk to relatives and friends who have gone through the process for their insights. Read all you can about the closing process. Make a list of questions about items you don't understand and ask your lender.

Go online. The HUD (www.hud.gov), Federal Reserve (www.federalreserve.gov) and Federal Trade Commission (www.ftc.gov) websites provide free guides to mortgage costs.

Shop for the best. Look for a loan provider whose rates and approach you like. Some lenders prefer to meet face-to-face, others use the Internet or phone for speed. Keep asking questions until you feel comfortable and don't sign anything until you feel confident.

Go with your gut. Mortgage lenders are required by law to give you a Good Faith Estimate (GFE) within three days after you apply for a loan. Many will give it to you earlier. The GFE lists all estimated fees you'll pay at closing. Select a lender you trust even if their fees are a few dollars higher, because the good faith estimate is just an estimate. Before closing day, request a HUD-1 form (lenders provide this by Federal Law) which contains all of the final settlement numbers.
Posted by Customer Service on June 23rd, 2009 11:41 AMPost a Comment (0)
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