Closing Costs And How to Negotiate Them

Closing costs are an inevitable fact of life when buying a house. You can expect to pay a percentage of your home’s purchase price in closing costs before you can call it your own home. These costs range from home inspection fees to loan arrangement fees to title insurance. Each of the costs is necessary, but many of them are negotiable. Here are some of the most common closing costs, and how you may be able to save on them.

Start by looking over the final settlement sheet on your home purchase to see if there are any fees or costs that you don’t understand. Don’t be afraid to ask for an explanation of the fee.

Bank attorney fees
Your lender will have paid for a title search and had attorneys draw up the various documents and contracts for your home sale. The fees can range from $250 to $1000 or more. If your home purchase was standard with no complications, the bank attorney fees should be on the low end of the spectrum. If they exceed $500, you’re within your rights to ask for an accountant’s explanation of the costs.

Document Preparation Fees
Once upon a time, all documents pertaining to a home sale had to be typed up. That took time for a clerk, and the banks passed the cost of paying the clerks on to you. These days, most of those documents can be prepared on the computer and simply printed out from a template. Many banks are very willing to waive document preparation fees if you ask.

Processing Fees
This is another charge that many banks are willing to waive. Typically, it runs about $150, and it’s really just a paper handling fee.

Courier Fees
Banks typically charge $50 or more to deliver your documents to you by courier or overnight delivery service. Save yourself the money by stating up front that you will pick up the documents yourself, or request that they be sent by regular mail.

Notary Fees
If your bank or lender has a notary working for their office – and most banks do – ask that the notary fees be waived or reduced. The worst that the bank can say is no.

P.O.C.
If you see a charge labeled P.O.C. or “paid outside closing”, get suspicious. It often represents a commission paid to a broker or agent for getting you to agree to pay a higher interest rate. Compare the figures on the day you lock in your loan rate with the market rate sheet for that day to be sure that you are getting a fair deal for your loan.

Underwriting Fees
Underwriting fees are the charges for verifying the property value of your new home and preparing the documents. It usually runs about $150 to $200, but is often negotiable.

Credit Report Charge
A bank will pay about $10 for a copy of your credit report, but often charge you as much as $50 for going to the trouble. Usually, if you ask, they’ll drop the credit report charge to the $10 that they paid for your report.

This is not a full list of the closing costs you can expect to pay. Rather, it’s a list of those that are the easiest to negotiate. By being assertive and asking for explanations and discounts, you can save yourself several hundred to several thousand dollars in closing costs.