Saturday, October 14, 2006

Are you paying too much in Closing Costs?

Unfortunately Washington State does not currently license loan officers. While Mortgage Brokers require a license, their loan officers do not. That will change next year when Washington State's loan officer licensing laws take effect. In the mean time, its important to make sure your lender is ethical, upstanding, and open about their fees, points, and other miscellaneous charges.

Bankrate has done a study regarding Closing Costs. By surveying lenders nationwide they have come up with a national average for what your closing costs should be. Keep in mind these closing costs are based on a $180,000 loan, which is not necessarily a realistic amount in Western Washington anymore. Take a look at this study and see if your lender is overcharging you.

In defense of lenders, the following situations are usually legitimate reasons for having above average closing costs:
  • You have poor credit
  • You have had a bankruptcy recently
  • You work a non W-2 job, or are self-employed
  • You have worked at your job less that 2 years
  • You have a high debt to income ratio (Average is around 30% - 40%)
  • You are doing a zero down, 100% financing loan (This probably means you have a first and a second mortgage, both with their own closing costs)
  • You are purchasing an investment property

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