How to save on house closing costs?

[happily single]

I am in the process of buying a house through a short-sale. When I bought my last house 8 years ago the closing costs were about $3,000 (my end). I've called around to several lenders and have been quoted $5,000 for closing costs!!!

Does this sound high to anyone else?
Is there any way to lower these costs? I know most are set by the closing attorney (In RI), but when you apply for the mortgage you don't know who the closing attorney will be, or what his costs will be until we get closer to closing.

 

[mrsklamc]

Call a credit union. Mine has no closing costs.

 

[msmayor]

Remember that a big chunk of closing costs on a new mortgage can consist of interest for the first month (from date of disbursement until date of your first mortgage payment) and two months of escrow for property taxes and possibly insurance. That alone can total a few thousand dollars.

There may also be 'points' on the mortgage to buy the rate down to a lower level. Each point equals 1% of the loan amount, so $1,000 on a $100,000 mortgage. That is in addition to any interest paid up front as described previously.

Title insurance premiums can be $500-$1,000 and I would suspect on a short-sale this type of insurance is critical. This too is paid up front at the closing table.

You should be provided with a good faith estimate of closing costs which can be the basis of comparison and a chance for you to see what (if any) costs can be eliminated.

 

[dis-happy]

Nothing is in stone until it's in writing, so those are probably the high end of the scale.

However, please note!!!! You, the buyer, gets to choose the closing attorney. Call around, get some quotes on the specific fees for attorney costs and pick the one you want!!!! In our area I bought a house and used the closing attn'y the real estate agent recommened. He was so expensive! And everyone around here uses him, I honestly think they get some kickbacks. The second (and third) time I needed to close I got the name of someone else, in a small office and paid a whole lot less. Remember, the choice is absolutely YOURS to make.

 

[UCFALUM]

I thought the closing prices were up when we closed this year. We did shop around and went with someone we picked (internet). Our agent was NOT happy but we save $$.

 

[Crystal0608]

I'm under contract now and I've calculated my actual closing costs and prepaids to be @ $2,900 after I called around and got recommendations and quotes. My truth in lending form was a couple thousand higher. As a buyer, you choose your own real estate attorney. Call your local county and find out what the 2010 taxes were and what the estimated 2011 taxes will be. You'll have to pay the 2010 taxes at closing if unpaid and the 2011 taxes/12 will be included in your monthly escrow. Call and get homeowners quotes (I called and got a 20% discount for combining my car ins-much cheaper than estimated). You have to prepay a year and also that amount/12 is the other part of your monthly escrow. My builder recommended the surveyor and he has surveyed the land previously so $100 cheaper than the truth in lending. Call termanix or your local bug place for a pest inspection quote. Hope that helps!

 

[Claire&TheBoys]

It's not always true that the buyer gets to pick the closing agent. In Florida, the seller gets to make the selection. We just bought a short-sale house last month and our closing costs were ~$5500. That included real estate taxes from date of closing through 12/31/10, the initial payment of our homeowners' insurance ($1500), plus 3 months' escrow on the taxes and insurance. We also paid for the survey, termite inspection and a re-check on the appraisal at closing. We also had to pay some transfer fees and taxes. The bulk of the expense was the insurance and taxes, though.

 

[Swimalie]

I've closed on 2 houses and have never used an attorney. We read our own paperwork and understand it all and have never had a problem. So one place you can save is not hiring an attorney as long as you trust yourself to read everything and understand it all. Also, the mortgage company will get title insurance and some mortgages will try to get you to buy title insurance. It is not necessary for you to have it. It is supposed to cover you if something happens and someone finds out that your property is home to an endangered specie or belongs to someone else, etc. You can refuse the title insurance they try to get you to buy. We did this and is saved us about $700 on closing costs.

 

[msmayor]

I've closed on 2 houses and have never used an attorney. We read our own paperwork and understand it all and have never had a problem. So one place you can save is not hiring an attorney as long as you trust yourself to read everything and understand it all. Also, the mortgage company will get title insurance and some mortgages will try to get you to buy title insurance. It is not necessary for you to have it. It is supposed to cover you if something happens and someone finds out that your property is home to an endangered specie or belongs to someone else, etc. You can refuse the title insurance they try to get you to buy. We did this and is saved us about $700 on closing costs.

I respectfully disagree with this statement.

A home purchase is for a majority of people the single LARGEST and most important purchase you will make in your lifetime. You are spending tens of thousands of YOUR dollars. Trying to save a few hundred by skipping an attorney can be a big mistake.

Trying to go cheap can be very expensive.

 

[happily single]

I could be wrong, but in RI you need an attorney to "conduct" the closing. I know I've seen on HGTV that the closing is handled by a notary, but its always been my experience the attorney handles the closing.
Of course I can't find my prior settlement statement, but normally the attorneys fee is about $500-700. The rest of it are "stupid" charges, doc prep fee, federal express fee, etc. I need to get a hold of the "truth in lending quote" before I can start nickel and diming them.

Can anyone answer why I would need title insurance? Luckily I do not need private mortgage insurance (PMI) but is it required that I have title insurance?

 

[msmayor]

I could be wrong, but in RI you need an attorney to "conduct" the closing. I know I've seen on HGTV that the closing is handled by a notary, but its always been my experience the attorney handles the closing.
Of course I can't find my prior settlement statement, but normally the attorneys fee is about $500-700. The rest of it are "stupid" charges, doc prep fee, federal express fee, etc. I need to get a hold of the "truth in lending quote" before I can start nickel and diming them.

Can anyone answer why I would need title insurance? Luckily I do not need private mortgage insurance (PMI) but is it required that I have title insurance?

Its to protect against the possibility that someone else out there is the true owner of the property.

If there is another individual or company that can prove through legal channels that the property was transferred to you in error, you can lose your house. But your mortgage does NOT go away. You have no house and thousands in debt that must be re-paid.

Title insurance is what would pay out in that case...

Maybe there is a prior lien on the property that was missed during the title search at closing and suddenly pops up years later. A lien that requires thousands of dollars to satisfy. If you own the property, you can't transfer or sell it until that lien is satisfied. Title insurance will pay out in this case for the defect in the title.

There are other situations, but basically it protects you from surprises if a title search after closing reveals some old information that didn't come to light at the closing table.

 

[dcldad]

Hi there, the biggest part of the closing costs are associated with the mortgage and this is down to your lender charges. In terms of title fees, this does vary however not to any huge degree. You will still have to pay doc stamps on the note. Now im not sure where you are located, but I can tell you where I am in Orlando, the SELLER selects the title company. This can be negotiated, however, what is common more often than not is if the Buyer selects title, then they pay all closing costs even the sellers. Any good agent would negotiate this for the seller. If it is a short sale then they typically wont let you select title company as they are doing this on bulk with a company. Keep in mind, the seller doesnt want to over pay for their share of title costs so they are going to be looking for a competetive company.

Nothing is in stone until it's in writing, so those are probably the high end of the scale.

However, please note!!!! You, the buyer, gets to choose the closing attorney. Call around, get some quotes on the specific fees for attorney costs and pick the one you want!!!! In our area I bought a house and used the closing attn'y the real estate agent recommened. He was so expensive! And everyone around here uses him, I honestly think they get some kickbacks. The second (and third) time I needed to close I got the name of someone else, in a small office and paid a whole lot less. Remember, the choice is absolutely YOURS to make.

 

[Swimalie]

I respectfully disagree with this statement.

A home purchase is for a majority of people the single LARGEST and most important purchase you will make in your lifetime. You are spending tens of thousands of YOUR dollars. Trying to save a few hundred by skipping an attorney can be a big mistake.

Trying to go cheap can be very expensive.

Well, I'm about to close for the 4th time (2nd house but refinancing for the 2nd time) and I've never had an attorney. I read all the paper work and understand it well.

 

[WheelCEO]

It's not always true that the buyer gets to pick the closing agent. In Florida, the seller gets to make the selection.

actually, it depends on the county you are in.

and there is NO need for a private attorney, if you get one.. you are wasting your $$$. As long as you have a title company doing the closing, they have lawyers that work for them and make sure everything goes as planned. I have seen more deals fall apart because of the incompetence of a private attorney

 

[Tarheel girl 1975]

Due to regulations, any disclosures made on the truth in lending form will be made on the high side. Otherwise the lender has to eat the difference. For example, most attorneys around gere charge $500 for a closing, but some will charge up to $1000. So we always disclose attorney fees at $1000.

 

[disneychrista]

I would figure 3 1/2 - 5% for closing costs. If I remember right my closing costs were close to $7,000.

 

[crisi]

Never done an attorney either. I do read contracts, and do so for a living. Mortgage contracts in my state are fairly standard and fairly well regulated. A title search is not required by law, but I always get one, and I get title insurance - which is the biggest risk - that your title isn't clear. Some states do require them though.

Mine were $4k on the house we just bought. But it was a little tiny house that we didn't spend much on.

 

[eolian]

there are 2 types of title insurance. Loan and Owner's. I work for a real estate attorney in NY as a paralegal. If you are taking out a mortgage the bank will REQUIRE Loan title insurance and here in NY the price is set by law. Owner's insurance is optional. Unless there are issues with the title most of the time you do not need to purchase it. Most of the closing costs are recording fees/taxes, etc. The main things you can control is the cost of your homeowner's insurance and attorneys fees. The GFE is always going to list things higher than they will cost b/c as a PP said, they lender has to eat the difference if they are higher than on the GFE. In our area it is unadviseable to buy property w/o an atty, and it is pretty much unheard of when a mortgage is part of the transaction. I know in other states that this may not be the norm.

 

[phred52]

I'll just mention that paying cash (no mortgage) eliminates paying any points.

 

[Swimalie]

I'll just mention that paying cash (no mortgage) eliminates paying any points.

You can get a mortgage without any points. Did you mean closing costs?

By the way, my husband bought his first home with cash on the day of closing