Myth # 3: Shopping for the title will save you a lot of money
There are other important aspects of your loan that you should pay more attention to than the title to save a ton of money.
The most important thing to know is what the closing cost is and how it is related to each rate. That is a lender’s advantage that they will use to screw you and leave you to dry.
Closing cost can be broken down into 3 main parts and it is color coded for high to low dollar amounts:
1. Lender Fees (BOX A)
Lender fees can be considered junk fees in a sense that lender controls it. These are all moving parts so you have to understand how they all add up, but for now just remember that Lender fees include:
Underwriting, Processing, Origination, Application fee, Credit report Fee.
2. 3rd Party Fees (Box B, C, E, H)
3rd party fees start with the title company which charges to search and makes sure you have and will not have a lean on your house (title insurance). The rest is charged to prep documents, deliver them to your house for signature and record everything once it is said and done. Can it be waived? You bet but you need to take a higher rate, so the lender can cover it for you and NO it’s not worth getting it waived for a higher rate. It is possible to shop this section but likely not worth the effort as you have way bigger eggs to fry in terms of getting a better rate and cost.
3. Prepaid (Box F, G)
If you are trying to shop your Prepaids you are wasting time. They are your taxes, insurance, daily Interest, mortgage insurance and anything else that needs to be collected for escrow. It’s probably the only time you can relax and not worry about getting screwed.
While some lenders will collect a few months in escrow, others will do 12 months. It all depends on the lender and when the loan is closing. You can not shop for the number of months it is collected.
Typically done by the title company and they keep their numbers straight as an arrow. Unless collecting too much is affecting the underwriting and term there is nothing to shop here as it all depends what day of the month you close so they can collect enough prepaid interest.
Myth # 4: My credit scores won’t drop when LOs do credit checks while shopping around for a mortgage
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