digest
Short Summary
Main recommendation: Review every line of your Loan Estimate, especially Section A (lender charges), and shop around for third-party services, then ask your lender about options such as waiving the underwriting fee, seller concessions, or a lender credit in exchange for a higher rate to reduce cash needed at closing. Most closing costs are charged by third parties rather than the lender, so negotiation focuses on the lender's portion and on shopping the other services. The speaker, Kyle Seagraves, frames this as a way to lower your out-of-pocket cash.
Key Points
- A Loan Estimate is a legal document every lender must provide at least three days after you have a contract on a home, itemizing your rate, payment, and closing costs; the speaker recommends checking page 2 for costs.
- Origination charges in Section A are fees from the lender, such as an underwriting fee (paying the underwriter to close the loan), points to lower the rate, or a processing fee.
- Most closing costs, such as appraisal, title company, and tax fees, are charged by third parties, not the lender, and can be shopped around.
- Recording fees charged by the county are generally not negotiable, since the county doesn't do a lot of negotiation.
- Lender-side flexibility is limited: there are no strong-arm tactics, but there are options if the final cash-due number is hard to cover.
Details Worth Noting
- Concrete instructions:
- Get your Loan Estimate; if you have a contract on a home, the lender must provide it within at least three days.
- Look at page 2 of the Loan Estimate, starting at the top left, where origination charges appear.
- Review Section A and ask the lender about each lender charge, checking whether it can change.
- Shop around for the title company instead of automatically using the one your Realtor picks, comparing their fees.
- Shop for the first year of homeowners insurance on your own and compare rates to find the best fit.
- Ask your lender whether you are eligible to waive the escrow account, which sets up insurance, taxes, and a cushion, to save on closing costs.
- Review every line item with your lender, asking why each fee is charged, who is paid, and what it does, to remove extraneous or unneeded fees.
- If the final cash-out-of-pocket number is too high, ask your lender about waiving the underwriting fee (built into a slightly higher rate), increasing seller concessions, or getting a lender credit by accepting a higher rate.
- Waiving the underwriting fee increases the interest rate slightly, but reduces the cash you must bring to closing.
- An escrow account's purpose is to ensure taxes and insurance are paid on time.
- The speaker gives an example that an appraisal fee is normally about $500.
Bottom Line
Closing costs are only partly negotiable: the lender's Section A fees and third-party services like title and insurance can be compared, while county recording fees generally cannot, so review the Loan Estimate line by line before deciding.
