The fees that the lender controls, and which are most subject to
negotiation, are origination, discount, credit reporting, assumption,
mortgage broker, tax related service, application, commitment, rate
lock, processing, underwriting and wire transfer fees.
If a fee seems vague or questionable, ask. Some mortgage
companies include so-called junk fees that you can eliminate or
There are some fees that cover services that the lender typically
shops for. The lender is supposed to pass these fees directly to
you, without marking them up. These third-party fees include the
settlement, closing or service fee; appraisal; abstract or title
search; title examination; document preparation; notary; attorney,
and title insurance.
You don't have a lot of negotiating room on these
fees, but if one is much higher or lower than the comparable fee
in a competing offer, ask for an explanation.
Fees for services that you
can shop for
There is some overlap here with the third-party fees mentioned above
-- specifically, the attorney's fees or settlement, closing or service
fees. In some states, the closing is done by attorneys, and in other
states, the closing is done at a title office. Either way, you can
shop for a less expensive closing-service provider. You also are
expected to shop for homeowners insurance instead of taking the
lender's estimate as gospel.
Your local and state governments will charge recording fees, tax
stamps and transfer taxes. There's not much you can do to negotiate
Lenders, especially those that are huge and operate nationwide,
often have trouble estimating title insurance and government fees.
Scrutinize these line items; the lender with the smaller estimate
for title insurance or government fees might be inaccurate. National
lenders have particular trouble estimating the buyer's cost for
title insurance -- not because they estimate the price wrong, but
because of varying customs regarding who pays what. In one county,
the seller might customarily pay for title insurance, while in the
adjoining county, the custom is for the buyer to pay for title insurance.
Remember, you can always negotiate with the seller
to have them split or pay outright some of the closing costs, points
or fees. You don't have to follow the customs of your area.
Your time of the month
Because all mortgage loan payments are due on the first of the month,
you can avoid or reduce the prepaid interest due by closing on or
near the last day of the month.