Strategy No. 3: Push back on lender fees
A lender might charge a flat fee that wraps in services such as underwriting and originating, while others charge for each separately. That’s fine. However, Martin says, “when you start seeing more than one, definitely two, three, four or five line items of itemized charges to a mortgage company, they’re nickel-and-diming you.” That’s true of bills for any closing service, he adds.
And watch out for fees with vague names, such as a “funding fee” or “delivery fee.” If you see these fees, ask your lender about them. It might remove certain fees, or you might need to look for a different lender that doesn’t charge as many.
Strategy No. 4: Comparison shop for title, settlement services
If you’re going to shop for title and settlement service providers, move quickly. These firms require time for research and preparing documents.
The companies your lender recommends might be good deals. Perhaps your lender negotiated a volume discount, or knows a particular company’s service is outstanding, Martin says. But do your own online research and ask friends and family for referrals.
You can generate competing quotes on online marketplaces. On Austin, Texas-based TitleClose.com, for instance, companies pay a $325 annual fee to be listed. Shoppers enter information about their property and mortgage, including address, price, property type, closing date, whether there’s a mortgage and, if so, for how much.
Searching in a city yields around 25 to 40 itemized quotes; searching a smaller town delivers roughly a dozen, says Cara Ogrodowski, TitleClose vice president. You can rank your quotes by price, distance or customer ratings and learn average fees in your community for your loan amount, among other details.
Tips for shopping for title and settlement companies:
- Don’t get mired in details. One settlement service will list certain items as buyers’ costs; another as sellers’ costs. Ignore that, says Steven Palmer, CEO of Entitle Direct Group, a Connecticut-based title insurance and settlement company operating in 40 states through EnTitle Insurance Company. Just compare total prices, checking that each quote includes identical services, Palmer says.
- Low fees aren’t everything. Service also counts for plenty, so consider customers’ recommendations.
Strategy No. 5: Ask the seller to contribute
Depending on the market and the home, a seller might contribute money toward your closing costs. However, inventories are low in many places these days, and buyers are competing aggressively, so sellers don’t make many concessions.