Who Charges These Closing Fees?
I read a great post today from a colleague "in the know". Shawn Von Talge at Professional Mortgage Group. He was discussing the different factors that create the total cost for the closing on a purchase or a refinance. The title of his comment was "Hand in the Cookie Jar", and I think its pretty fitting. He described how there are several entities that perform different functions in order to protect the interest of the buyer, the lien holder (usually a bank), and the community at large.
One thing I always advise my clients on is the logic behind the underwriting and funding process. You have to put yourself in the banks shoes for a little bit. By granting the borrower an approval, the lender is saying "what we know about you (credit worthiness, ability for repayment, and intent) and what we know about the collateral (usually the property), we feel comfortable assuming that degree of risk to let you rent our money". And that's all any loan with interest is . . .renting money. But they also have to protect their interest in the event of any unforeseen circumstances. Because in the big picture, if this borrower defaults, the lender is left with the house. And to be on the up-and-up, they use impartial 3rd parties to verify or perform services so that every one is playing to the same sheet of music (so to speak). So, there will always be fixed costs associated with any transaction. No way around it.
I always grumble when i see advertisements saying, "the No Closing Costs Home Loan". It simply doesn't exist. But any good mortgage broker can arrange a "No Out-of-Pocket Expense Home Loan". Two very different things. That's why its important for brokers to get an idea of the big picture for their clients. an understanding of their short and long term goals. "No Out-of-Pocket Expense" can be a great benefit to some, where paying a little more at closing may yield a bigger benefit in the long run.
Anyway, I encourage you to See Shawn's comments, and share some of your experiences.
