Understand Closing Costs
Posted By on May 18, 2010
One of the surprise expenses for most first home buyers is the total closing costs. It is important to understand these fees, especially if you are considering re-financing your home, since any savings on a new rate may disappear once you have to pay the closing costs on a new mortgage.
When a bank establishes a mortgage, it incurs expenses to do so. For the most part, many of these expenses are not determined by the bank, but are fees they are charged and pass onto the borrower. There are some fees over which the bank has control, and if they are aggressively seeking new loans, they may reduce or eliminate them.
Closing costs can include: -Application fee -Origination fees (or points) -Attorney fees -Transfer taxes -Recording fees- -Appraisal -Surveys and
Depending on the state where you live, there may be even more.
Can you, as a buyer, do anything about these closing costs? In certain markets, banks may be willing to reduce or eliminate fees that they themselves charge, such as application fees. But many of the fees involved in the closing of your mortgage are not under the control of the bank, such as the appraisal fee, the legal fees, etc.
One of the first steps you should take is to get a good faith estimate of the closing costs. Then you can analyze them. One of the dangers of being offered a lower rate may be that the bank inflates the closing costs to make up for the lower loan rate.
One of the most effective ways to get fees lowered is to learn the closing costs at your bank’s competitors and you can ask your bank to lower them if they are too high.
Now that you know how much you have to pay, you have to make sure it is worthwhile to re-negotiate your current mortgage. You can obtain a mortgage calculator on many sites on the net, and it will tell you how much the loan is going to cost over its life.
Don’t forget that the new loan will now also cost all of the closing fees you will have, so add them to the calculation. You will now know whether or not a re-financing is a good idea or not. This is not a lot of trouble to go to since it may save you a substantial amount.
Find more about hypotheque and taux hypothecaire