So you’re hunting for a house? You want to make use of the 8000 new home buyer credit? You look at closing costs and you get a shock. You look around for lenders and everyone quotes wildly varying numbers for the same things and you are not sure who to pick or what will actually save you money or whether the good faith estimates are correct. Here is a simple guide on figuring out which lender is best for you.
First thing naturally to compare is the Mortgage Rate and the APR, which directly affect your monthly payment. In todays times, 30 year fixed rates are probably your best option which makes things a little simpler. Just compare rates/apr and monthly payments for the same kind of loan across lenders. Find the ones that best suit you and start narrowing down lenders.
But once you find the rate, how do you know whose closing costs are the lowest? For that exclude all the items that the lender has no control over such as taxes and insurance. Next take out everything to do with Title insurance and settlement costs (sometimes put in as Attorney costs). These are just estimates from the lender and often lenders will make very low estimates to make their closing costs appear lower.
What remains (mostly items that are numbered in the 800’s on the Good Faith Estimate) is what the lender has control over and will often negotiate if you try and pit lenders against each other. These items include Origination Fees, Processing Fees, Document Preparation Fees, Mailing Fees, Commitment Fees etc.
Simple thing to do is make a spreadsheet which just lists all these for each vendor and then sum them up to find the lowest.