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Analysis of ING’s $555 Closing Cost Mortgages

ING Direct has been running a promotion for quite some time offering flat $555 closing costs on their mortgages (this promotion will be over at the end of this month, Feb 2006). The reviews on their service has been mixed and I haven’t had first hand experience with ING with products other than their Orange Savings Accounts. But is the $555 flat closing cost promotion actually a good deal financially?

If you’re looking for a fixed rate mortgage, you’re out of luck. ING only offers 3/1, 5/1, and 7/1 adjustable rate mortgages at competitive rates. That alone may make this a non-deal for many but for those of you who are not anti-ARM because of your circumstances, read on.

A lot of various fees and costs are lumped into the term “closing costs” and so it’s sometimes difficult to compare them. When I was looking for a house last year, the fees that were listed as closing costs [3] with LendingTree [4] were a tax service fee, underwriting fee, processing fee, document preparation fee, and credit report fee to the tune of nearly a thousand dollars. (follow the link for a breakdown). ING’s closing costs fees covered by the flat fee include an administrative fee, application fee, funding fee, processing fee, tax service, and an underwriting fee. They calculate the average you’ll pay for those is $1,459 – which is $500 more than LendingTree’s quote about 8 months ago.

What it doesn’t cover are the things that are called closing cost fees but that aren’t actually fees in the sense that you get “nothing” for them. You’ll have to pay the seller whatever utility and tax prepayments they’ve already made and you’ll also have to cover a few other title related fees, such as title insurance which can be pricey.

The reviews I’ve read about ING’s customer service leave much to be desired but that’s to be expected if you’ve ever opened up a savings account with them. They make money because they cut back on their customer service and have lower upkeep costs. If you can handle just sending in a check each month, chances are you’ll be happy with paying $500-$1000 less in closing costs.

Go to this $25 ING Referral page [5] if you want a referral for an ING Orange Savings account, offering a promotional 4.75% until mid-April. If you sign up, deposit $250, you’ll get a $25 bonus and I’ll pick up $10.