Don’t get ripped off when you buy a house
If you’re buying a house, buyer beware. Beware of what? Well of exorbitant closing costs that might pad the bill you end up paying. Most people don’t buy houses on a regular basis and so they are not prepared for how confusing the process can be.
Stephen Gandel, a writer for Money magazine, says it’s always a good idea to ask “What are these fees for” and “What did you do for these fees?” The truth is, Gandel says, that a lot of the time they won’t be able to tell you what’s been done and why you’re being charged that fee.
Watch out for answers such as “It’s standard.” Shoot back, “Standard for what?” If you question your mortgage broker, chances are you can do quite a bit to reduce your closing fees—because they are really just junk fees. The process is confusing because it’s set up to be confusing—to take advantage of you.
Gandel says buyers have to be careful because many mortgage companies hide behind the practice by saying that everything they are doing is perfectly legal and that they are operating within the industry standard. He says that’s true—and the industry standard is to charge you more than you should be charged.
Elizabeth Leamy did a story about how to save thousands on your closing costs for ABCNews and says that the best thing homebuyers can do is learn the lingo of mortgage companies, and prepare to battle. Here are her tips for being a savvy consumer:
- Shop around for mortgages—and be aggressive when you ask about whether the terms for closing costs could change.
- Get a written quote from your title agent or closing attorney. If the bill is higher in the end, ask why.
- Let the people you’re dealing with know from the start that you will not pay padded closing costs—and you plan on asking for receipts.
- Check to see if there’s a limit on mortgage fees in your state.
- Check with local government about how it calculates real estate taxes—then check and see if your title agent has padded the fees.