5. It is important to get a detailed estimate of closing costs from all lenders I call  since loan closing costs vary widely from lender to lender.

Costs associated with purchasing your real estate are not controlled by the lender.  They include expenses such as attorney fees, title insurance, survey, recording fees, appraisal, and termite inspection.  These are costs which anyone will be required pay when purchasing a home regardless of loan amount or lender. All these expenses are provided by independent professionals who are not affiliated with your prospective mortgage lender.  It can be confusing if you compare these expenses item by item. Based upon individual experiences, each loan officer offers their best estimate as to what each cost might be and there will be some differences between individual loan officers.

 

When your loan officer prepares the good faith estimate, they will also include an estimate  for establishing your escrow account for future payment of taxes,  insurance, and mortgage insurance (often refered to as pre-paids). Property taxes are set by the appropriate government taxing authority.  Unfortunately, property taxes are not negotiable.  Premiums for homeowners insurance are set by the insurance company you select.  All mortgage lenders will require that you pay your first year homeowner’s insurance plus two additional months at closing.  All lenders work off of a schedule based upon the time of year that you close in determining how much is placed into escrow account will vary between lenders.  The regulatory agencies (Fannie Mae) only require you to disclose two months property taxes for escrow.  But, depending on when your closing is scheduled, you may be required to pre-pay up to 11 months of property taxes.  Again, based upon individual experience each loan officer will offer you what they believe is a reasonable estimate of your monthly taxes and homeowners insurance.

 

The most accurate method to compare lenders (in terms of closing expenses) is to ask about their specific fees for: Loan Origination, Underwriting Fees, Tax Service Fees, etc.  All lenders will offer a different set of scheduled fees and each has a tendency to establish unique names for each of these fees.  It is important to make sure you obtain all of these loan charges and fees.

You should also compare discount points charged by various lenders if you are considering advance payment to reduce your interest rate.  Discount points may be paid at closing to reduce the interest rate of your loan over the term of your mortgage.