In this second installment of my home buying autopsy series, I’ll take a look back at my dealings with my lender, Equitable Trust Mortgage. I knew that I could negotiate some of the fees with my lender but I felt pressure from the sellers to close the sale within two weeks, which by all accounts is very difficult to do. Since my only benchmark at the time were the closing costs associated with a loan from LendingTree  and Equitable Trust’s closing costs were significantly lower ($500 vs. $995), I had no reason to think about shopping around.
Everything in life is negotiable, including the closing costs related to a mortgage. All the 800-level fees are negotiable because the lender gets to set them at whatever they believe the market will bear. The following is a list of the 800-level items:
- 800. Items Payable In Connection with Loan
- 801. Loan Origination Fee
- 802. Loan Discount
- 803. Appraisal Fee
- 804. Credit Report
- 805. Tax Service Fee
- 806. Document Preparation Fee
- 807. Flood Certification Fee to FDSI
- 808. Doc Prep to Equitable Trust Mortgage Corp
On both my first and second mortgages, the document prep fee to Equitable Trust was in the $250 range. In hindsight, I bet I could have negotiated this downward because there’s no reason why the preparation for the second mortgage would take as much time as the first one. It’s sort of like a quantity discount. 🙂 None of the first six 800-level fees appeared on the second HUD, I would’ve immediately contested those because there’s no reason why you would need to appraise the house twice or get two credit reports.
As for the rates themselves, 5.75% and 7.5%, could’ve been negotiated downward I bet. I think I was hamstrung by the demands of the sellers (two week closing) and so I didn’t feel I had much to negotiate with especially when the lender knew that I only had two weeks. Even so, perhaps I could have negotiated a quarter point lower on both and saved a few bucks that way.
Ultimately the moral is you should always ask and you should never feel as though you have to go with any particular lender. The money they give you is just as green as the next guy; it’s simply a matter of how much they’ll want to charge you for it. It’s easy to overlook these nickel and dime charges when you’re dropping a few hundred thousand on a home, but these fees come straight out of your pocket. All the saving in the world in anticipation of a home can be wiped out by not paying careful attention to these fees and not contesting or negotiating when you can.