Majority of Closing Costs, Fees are Negotiable

Here’s something all mortgage loan applicants can agree on: the desire to save as much as possible during the home buying process.

With that in mind, keep in mind that the negotiations on closing fees can begin early on with the seller when you’re hammering out your purchase/sales contract.

As a way to sweeten the deal, the seller may agree to pay all or most closing costs, which is potentially saving you thousands of dollars. In recent years, sellers were much less likely to offer such an enticement, but since the advantage in most of the country has now swung back to the buyers’ side, there’s no better time to take advantage of this negotiating tact.

How the closing fees are traditionally divvied between buyer and seller varies from state to state, reports Yahoo finance. Similarly, how much is actually spent can vary from lender to lender.

The New York housing market, for example, had the highest title and settlement costs in the country. Texas was second, followed by Hawaii, Ohio and Florida. Those seeking a Missouri mortgage pay the lowest closing costs, according to the year’s study, followed by Michigan, New Hampshire, Montana, and Wyoming.

Without knowing what’s expected in your situation, we can tell you there are many fees that you can negotiate or even dispense with entirely, especially if you’re an intrepid negotiator.

For example, bargain away a document preparation fee, considered by most to be a junk fee, which be $150 to $250. with outright. Similar are the “commitment fee,” “underwriting fee” and “processing fee” - all costs supposedly tied to loan review and home purchase loan processing.

If any of these will be included in your closing-fee package, ask what specific services they cover, and be particularly wary if more than one is assessed.

Incidentally, the federal government requires mortgage lenders to provide buyers with reasonable “good faith” closing-cost estimate well before closing date, but that doesn’t mean a few others won’t be tacked on at the end.

As you can see, there’s a lot at stake. Buyer closing costs can range from 2 percent to as high as 7 percent of a home’s sale price, or $4,000 to $14,000 on the purchase of a $200,000 home.