So how do you compare second mortgage closing costs?
To get started you will need to apply for a mortgage. You may do this one or several mortgage sources.

These sources can include mortgage lenders or mortgage brokers. One is not necessarily cheaper than the other. Your friendly neighborhood bank that you have your checking account with may fleece you when you get a mortgage loan.

It is best to evaluate your loan offers one by one. Within three days of applying for a loan you will get a “Good Faith Estimate”. This is an estimate, but not a guarantee, of what your closing costs will be.

These closing costs include the lender/broker charges, as well as third party charges such as title, escrow, taxes, insurance, etc. Keep in mind that these third party costs are usually not controlled by a lender/broker.

You should compare offers for the same loan type or terms. A 30 year fixed mortgage offer from one lender is comparable to a 30 year fixed mortgage offer from another. You can’t compare a 30 year fixed loan with a 5 year fixed loan, unless both of these offers are from the same lender.

A “no closing cost” option usually means you get a higher interest rate. Often times for people who are doing a “cash out” refinance this may make sense. It maximizes the amount of cash a borrower gets up front.

Negotiate

Offers are not final. Interest rates change every day, so if rates decline for a few days you may be able to find out if you can get a better deal.

You may also with a lender to see if the any of the fees are negotiable. These may include processing or administrative fees.

Right Deal

When negotiating for the right deal you should not bluff about an untrue competing offer. Lenders and brokers are in the business and keep on top of interest rates.

You can compare different offers and decide which combination of closing costs and interest rates is right for you.

If you plan on keeping a property for a long time you may want a lower rate. If you plan on keeping the property for a short time you may want the lower closing costs.

 


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