How do I avoid getting taken at the closing?

What is Closing?

Closing is the day that the buyer and the seller complete the legal transfer of the house. Or, if you are refinancing, the day the new loan is funded and the old loan is paid off. There is obviously a lot of pressure on you to "get it done" so it can also be the time where unscrupulous lenders will try to sneak in some surprises.

How Do I Avoid Getting Taken At Closing?

There are two major ways in which you can get taken at closing. 1) The terms of your loan can be different than what you were told and / or 2) The fees associated with your loan can be different than what you were told. The best ways to avoid both of these problems are:

Work With An Ethical Lender

There are lots of moving parts to a home loan and from the time you fill out your application until the time the loan is funded, a lot can change. Unethical lenders or brokers will use those changes to try to increase their profits at your expense, while ethical lenders will explain why those changes occurred and try to minimize the negative impact and maximize the positive impact on your loan. Select a lender who has agreed to the Borrower's Bill of Rights on

Get A Good-Faith Estimate In Writing

Lenders are required by law to provide you with a written good-faith estimate of closing costs within three days of your application. Closing Costs are the costs associated with processing and funding your loan, and they can be separated into two types: recurring (like property insurance, property taxes or interest payments) and non-recurring (like points, appraisal fees, and inspection fees.)

Make sure you review the estimate and get your own quotes for some of the major costs. If anything seems even slightly fishy, ask your lender about it and even consider using a different service provider. Be sure to address any issues you see in the estimate before the final day, and then be sure to compare the estimate with the documents you sign at closing. Some lenders now will even guarantee the Good-Faith Estimate so that you will have certainty about closing costs early in the transaction. Ask your lender if they will make such a guarantee.