Avoid The Shock: The Reality of Closing Fees

By Daniel Von Schaumburg, Director Client Relations, Mortgage Department

If you’ve bought a home before, then we’ll guess you paid somewhere between eight or nine thousand dollars in closing fees.

The truth of the matter is that the cost of a home isn’t just the list price and if you’re not careful, fees and other associated costs can be incredibly high. That’s why at Affinity, we like to say we’re a contractor that only charges for the parts. Here’s how to keep your fees low the next time around:

  • Be Smart About Closing Fees: Most people don’t realize that the lenders they’re dealing with during the closing fee process are commissioned, which is why the sticker price is so high. Not only are they charging you what’s legally required, they’re also likely charging you an application fee, origination fee, lock in fee, and more, just to beef up the commission they make. Consumers often mistakenly assume that this must be part of the process. It doesn’t.

What are mortgage points? These are also known as discount points and are fees paid directly to the lender at closing, in exchange for a reduce interest rate. One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000).

  • Don’t Let Your Excitement Get the Best of You: We see this all the time, people get so excited over their pre-qualification letter that the excitement later clouds their judgement. For a number of reasons, people breeze through the home buying process, when in fact they need to be closely reviewing the small, but important details. This is where those added fees sneak in.
  • Play Chess, Not Checkers: There’s a lot of moving parts in the home-buying process and a lot of players involved. In the game of chess, the player is always thinking one step ahead, whereas in checkers, they’re only thinking about what comes next. Don’t fall into the trap of only thinking one step ahead. Consider all the details and decisions upfront to gather a plan that works best for you.

Buying a home, and closing on a home, boils down to this: education. Don’t allow the excitement of the process overtake your practicality. When in doubt, call a Mortgage Representative at Affinity for guidance! We’d be happy to review any loan estimate you may have received from another lender to help you understand the cost and fees.

Additional Resources:

Learn about Mortgages from Affinity

Should I Pay Discount Points? Affinity’s Calculator Can Help

Thinking Of Buying a New Home? Start Here

How to Buy and Sell a Home Without Losing Your Sanity

Make Your Dream Home a Reality with a Mortgage that i

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