Save Thousands on Closing Costs

In most states, if you are refinancing or if you are buying a house that the seller purchased less than 10 years ago, you can qualify for the "reissue rate" on your title insurance. All you have to do is get the seller to provide a copy of THEIR existing title insurance policy on the house. Having it in hand means less work for YOUR title company, so they should give you the "reissue rate." The discount is typically 40 percent and can mean hundreds of dollars in savings! The government does not require lenders to offer you the reissue rate, but you should always ask about it. Some title agents will pretend they don't know what you're talking about because it cuts into their commission. Other title insurance companies require their title agents to offer the reissue rate. Once again, you can save money by shopping around in advance for the best title agent.

Fees Imposed by the Government

Recording Fees

This is simply the amount the county clerk charges to make a record of the fact that you are purchasing the property. If you're refinancing, typically you still have to pay this fee because the county has to record the new lender's name. Some title agents try to pad this fee. Call your county recorder of deed's office to find out the true cost.

Tax Stamps

This is a tax charged when a property changes hands. The amount is based on the purchase price. It's sort of like a sales tax. It's just a chance for the county or state to collect a little money. If you're a first-time home buyer, the amount may be less. Some jurisdictions do not charge tax stamps when you refinance. Others base the charge on the difference between the amount of your old loan and your new one. Call your county office of taxation and revenue to learn the formula.

Recordation Tax

This is the same as "tax stamps," just another name for it.

Transfer Tax

This is another opportunity for the government to collect money. It's a percentage of the purchase price. Many jurisdictions do not charge this tax if you're refinancing. Call your county office of taxation and revenue to learn how this tax is calculated and whether it even applies to you.


Do your homework:

1. Shop for mortgages through several different lenders and compare the closing costs on their good faith estimates. Aggressively question the companies as to whether the figures on the estimates could change. Remember, the company with the lowest estimate, could pull the biggest bait and switch.

2. Shop around for the title agent or settlement attorney who offers the best overall deal. Get a written quote, and if additional charges appear at closing, dispute them.

3. Forewarn your mortgage company, mortgage broker and title agent that you will not pay padded closing costs for services performed by outside companies. Let them know you plan to ask for receipts.

4. Scan your good faith estimate for fees that don't apply to you if you're refinancing or buying a condominium.

5. Find out whether there's a cap on the fees mortgage brokers are allowed to charge in your state.

6. Find out whether the current owner purchased the property less than 10 years ago. If so, ask for a copy of their title insurance policy. Inquire about getting the reissue rate. If the title agent plays dumb, ask which national title insurance company they represent and call that company directly to learn its rules on reissue rates.

7. Call your local government and find out how it calculates real estate taxes. Don't let the title agent pad those government fees.

How to Complain:

If a lender does you wrong, try your state banking division. You can contact your state department of licensing to make a complaint against a mortgage broker. In some states the insurance commissioner governs title agents. If your title agent is an attorney, you can complain to the bar association.

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