Understanding Closing Costs

By Aaron Gilchrist - bio | email
Posted by Chris Berdoz - email

HOPEWELL, VA (WWBT) - How much do you know about buying a new home? A Hopewell couple found out they didn't know enough. And closing on their American dream quickly turned to a nightmare. So how do you keep it from happening to you?

Closing on a new home can take some time, but a Hopewell couple hit the four month mark before they decided something was terribly wrong.

"Won't return my calls. Doesn't fax me the right information that I request. And I just feel like when we first started the numbers were a little lower and now he's trying to go up on the interest rate." said Valerie Keffer.

Valerie is talking about the mortgage broker she and her husband found to handle the closing on her new house. We won't name the broker because the Keffers are still working with them. But as she sifted through the documents she has been provided, Valerie wanted to warn others not to make the same mistakes she did.

"The underwriting fee was high and I also don't really understand the yield spread premium." Keffer said.

At the outset, they got a good faith esitmate, but without any signatures, Valerie says. She expected closing to take 45 days. That ended up being more like 120 days.

She says since they got started, fees and interest rates have gone up or unexplained.

"The wire fee, $15. I asked him what that was for. He said that's for the bank to wire the money. And I researched online, they don't even charge to wire the money." Keffer said.

We took Valerie's story, and her documents, to counselor Mia Morgan at Housing Opportunities Made Equal.

"There is no reason once a loan is approved that it should drag on for that long of a period." said Morgan.

She says that while some of the numbers seem a bit unusual, all the information does seem to be in order.

"They are supposed to give you a good faith estimate that will itemize all of your list of the fees and what the loan costs are to you." Morgan said.

And that's where a home buyer has to speak up.

"Ask questions. If you don't understand, don't sign anything and just ask questions." Morgan said.

Morgan says the broker is supposed go through your estimate line by line, breaking down everything, in detail.

"They're supposed to explain to you why you're paying it and where it's going." Morgan said.

Even then, Morgan suggests taking home documents that could tie up thousands of dollars to make sure you understand or to generate more questions before you commit money, or in Valerie's case, a lot of time.

"Check out the mortgage lender, the mortgage loan officer and get referrals and make sure they're legitimate. Check the Better Business Bureau and gets some references." said Keffer.

The Keffers did finally close on their house. It was more expensive than they later learned it had to be.

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