June 21st, 2007 by George

Homebuying fees… where to begin. Let’s start at the beginning. And since I just went through all of this, representing myself, who better to take a renter thinking of buying or a first time buyer through it all?

I bought my first house earlier this year. My wife and I were so very proud! It is such a great feeling when you are sitting at that closing table and signing your name 74,345 times (did I mention I at least got a nice pen out of those signings?). The American Dream, as it is so termed, and it is fitting (Congress has even funded an initiative titled The American Dream). We are proud of our house. But… let me tell you about something that will make you wonder, is this really the American Dream?

A little thing called the settlement statement…

What all is contained on the settlement statement?  Everything you can think of, and plenty more you can not.

• Points and/or origination fees
• Escrow fees/prepaids
• Homeowner’s insurance
• Lawyer fees
• Private mortgage insurance (PMI)
• Recording fees
• Title search fees
• Credit report fees
• and on, and on, and on
• (read more here)

You need to be sure your lender is doing you justice.  Warehousing fees, markups, etc. may just be another way for the lender to pad their pocket.  When you get your HUD statement (be sure you review it prior to closing), make sure you go through it with a fine tooth comb.  If you are not sure what you are looking at, have someone qualified to take a look at it for you, or talk to your lawyer for the transaction.  They are typically unbiased and are experts when it comes to the buying/selling of a home.

When I received my HUD statement, the night before closing, there was over $2,000.00 worth of errors on it.  Panic began to settle in.  It ended up that taxes were credited to the seller when they should have been credited to me (which was an oversight on the lawyers part) and there were a couple of extra fees from the lender that should not have been there.  The point is to check and double check, after all, it is you who are writing the check.

 Some other savings tips:

• Appraisals, credit reports, & title insurance fees should be the same from lender to lender
• Your lender may be willing to drop or discount some fees
• Try to close your mortgage near the end of the month (which will save you money on prepaid interest)
• Negotiate, negotiate, negotiate!  You can have the sellers pay part or all of your closing costs!

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