8 ways to cut closing costs

8 ways to cut closing costs

Not only should you prepare for closing costs, you should also plan to negotiate them.

Closing costs are a hidden speed bump in the home purchasing process. Many people are so worn out at that point, that they just pay the closing costs and keep driving ahead at full speed. That's exactly what many lenders and brokers hope that you'll do.

Prepare for the closing costs before you get started and they'll seem like just another part of the process. And the few hundred dollars you save will come in handy when the water heater breaks the first week that you move in!

Check out the following eight tips to start getting an idea of how to cut closing fee costs:

#1: Plan ahead: shop around and get estimates on closing costs from lenders before you get pre-approved for your loan. While you should ultimately look at the closing costs along with other factors like the interest rate, you'll be able to get a ballpark figure of what they should be. Closing costs are generally 3%-5% of the total cost. If they are more than that, you can probably dismiss that lender.

#2: Simply ask the seller to share or pay for the closing costs. It's worth a shot, especially in this economy. If the seller is motivated to close the deal quickly, he or she just might agree to it.

#3: Get a Good Faith Estimate. Your GFE is an estimate of how much the closing costs will come to. According to federal law, the actual individual fees can vary up to 10% from the quoted levels in the GFE. Study your GFE and contest or negotiate any suspicious fees (we'll get to this in later steps). At least a day before closing, ask for you HUD-1 settlement statement. Make sure that this final tally of your closing costs matches the GFE and that no last minute fees have been tacked on.

#4: Ask your broker or lender to explain the closing cost fees to you. If you don't understand what the cost is for, have them tell you. If you can't get a good explanation, that's a sign that the fee is inflated or unnecessary.

#5 Determine what fees are "trash" or "garbage" fees. Are there excessive documenting and processing fees? Lender's inspection fees? Commitment fees? Assumption fees? Document preparation fees? These can likely be lowered or negotiated.

#6 Check to see how much you've been charged for the credit report. Are they charging you $150? It's probably bloated. And if they are sneaking that one by you, there are likely others.

#7 Make sure that you haven't already paid any of the fees. You've probably already paid an appraisal fee. Make sure that they aren't charging you twice.

#8 Title Company fees. Lenders or brokers often have a partnership with a title company. Check out the fee and do a little research to see if you can find a cheaper title company to work with.

It may feel like you are at the mercy of your lender or broker when it comes to things like closing fees. You can't forget, though, that the lender or broker wants the deal to close as much as you do. Remind yourself that you can walk away at any time and it will put you in a much better mental position to negotiate.

Foreclosed Mansions of Millionaires

Nic Cage's home (with its eye-popping interior) once sold for $35 million but was down to $10.4 million last year.

Foreclosed Mansions of Millionaires

Ever wonder how the rich and famous live? It turns out, they're not so different from us -- especially when it comes to weathering the financial storm. Even the ultra wealthy make bad real estate decisions. The only difference is, when they go into foreclosure, millions of dollars roll off their opulent mansions. Check out our list of foreclosed mansions, including the homes of Nicolas Cage and NBA legend Julius "Dr. J" Erving. 

Nicolas Cage's Bel Air Foreclosure

Poor Nicolas Cage – his taste in real estate is almost as questionable as 

his recent string of Hollywood blunders. This gorgeous Bel Air estate may look like a keeper from the exterior, but take a peek inside for an eyeful of that signature Nic Cage style – New Age-y color schemes, Orientalist artifacts, giant hash-pipe furniture and a life-sized Mickey Mouse statue. Once selling for $35 million, the super luxe manse was down to just $10.4 million at foreclosure auction last year.

There are only a few moments in a broker’s life when they might wish they were colorblind. This eye-popping great room captures just about every color under the sun – and then some. When Tom Jones sold this house to Nicolas Cage in 1998, we don’t think the Vegas crooner could have envisioned his living room in quite this light. The fiery dragon ornament over the jade-hued fireplace gives the room that grown-up fratboy feel.    

Ever wondered what the greenroom for the "Dating Game" looked like, circa 1975? Well, wonder no more. This busy lounge area just has too much of a good thing going for it. With a warm, neutral colored paint job and slightly less clutter, Cage may have sold this posh estate years ago.

It's Disney meets "Dynasty" in this spearmint-flavored dining room. Apparently, when the home hit the auction block back in April of 2010 at just $10.4 million (original price: $35 million), not one bid was placed on the property. Could it have to do with the menacing mouse staring down at prospective buyers as they walked into this otherwise handsome room?

Behold, the physical embodiment of the millionaire frat boy – the hash pipe sofa seat. These blown-glass chairs look strikingly similar to the smoking pipes that line the top shelves of most head shops. It’s unfortunate, because the rest of the room has an understated elegance about it. Hopefully Cage’s next real estate purchase will graduate him to more subtle floor designs.

Dr. J's Utah Mansion Foul

In December 2010, NBA legend Julius Erving fell into foreclosure on the mortgage for his 6,572-square-foot St. George, Utah, home, which he had custom-built in 2006. The problems began for the former Philadelphia ’76er when the homeowners association in Erving's Utah subdivision overlooking Zion and Pine Valley filed a lien on his home. The association claimed Erving owed $2,100 in assessments and fines, for improper outdoor lighting, a dead tree and misplaced garbage cans. That amount soon ballooned.

The home, which has 10-foot-tall doors, had a $1.5 million mortgage in 2006 and is worth about $2.22 million today, according toForeclosures.com. It first was listed in 2009 or $2.5 million and eventually dropped to $2.25 million before coming off the market in September.

Outdoor features include a covered deck, a fire pit, and a red, white and blue rubberized basketball court with the ‘76ers logo.

The 5-bedroom, 6.5-bath home includes this traditional dining room; a home theater with NBA logo chairs and a 150-inch screen; a master bath with a double-sided fireplace next to the tub; and a finished basement with a kitchen, walk-in closets, and a mother-in-law apartment.

Dr. J’s home includes five fireplaces -- including this one -- a  Jacuzzi, swimming pool and a putting green. Erving moved to Atlanta in 2008 to keep an eye on the golf course he bought with the help of a $11 million mortgage.

Georgia Foreclosure Is a Peach

Le Reve, a sprawling estate in Cumming, Ga., that was our estate of the day back in 2008 is now listed as bank-owned and under foreclosure. The home, which is approximately 47,000 square feet on 90 acres was listed at a stunning $45 million in 2008. It eventually dropped to $18 million in January 2010.

The gigantic manse has 82 rooms, two elevators and 62 televisions. The grounds include a heated swimming pool, pool house, spa, private playground, stables, tennis court, formal gardens and a guest house. The home, which is approximately 47,000 square feet on 90 acres, was listed at a stunning $45 million in 2008. In January 2010 we saw that price carved down to $28 million.Now it can be picked up for $18 million.

The lavish home's 82 rooms are all formally decorated and furnished with antiques from around the world, as well as handmade window dressings and custom paintings and murals.

Once the home of Hubert Humphrey, CEO and founder of Global Equity Lending, and his wife, Norma, it was built with a private bowling alley and a train room meant to imitate the old Central George Railroad.

La Reve also has its own golf course, a massage room and a huge movie theater that is a replica of Atlanta's famous Fox Theatre.

Living Large in SoCal

This posh estate in San Juan Capistrano, Calif., came on the market in February at the price of $4.2 million. The 11,000-square-foot mansion on 2.7 acres is a foreclosure worth millions more.

The Mediterranean-style home has 6 bedrooms and 6.75 bathrooms, as well as a resort-style pool with multiple waterfalls and a water slide.

Built in 2010, the home is in a private gated community near major highways. The grand entry space features high ceilings and marble floors.

The home has plenty of great views including one of the distant ocean. It also is fully landscaped with property zoned for horses.

The wood-paneled library provides a cozy old-fashioned retreat with a magnificent spiral staircase for visual interest.

The Trashed Monster Manse

In Encinitas, Calif., grotesque affluence has a name – the Vivienda. This 15-bedroom, 16,000 square-foot manor was zoned to be a residential home, but plans were soon put into motion to convert the gargantuan property into a drug rehabilitation center. Neither came to fruition, and in 2009 this $11 million mansion fell into foreclosure. With no bidders to speak of (even at the ridiculously low price of $2.75 million), it sat vacant until attracting the attention of a less savory group of onlookers—thieves and vandals. Read on to discover the fate of this massive foreclosure.

Looking at its barren rooms now, it's hard to believe that vandals broke into the vacant estate and stole close to $1 million in furniture, fixtures and appliances. Even the ultra luxe toilet seats were stolen in the heist! Not surprisingly, authorities fingered the original owner of the property with the high-end robbery. It was neighbors vociferous complaints that prevented the so-called "monster house" from being converted into a drug rehab center. Prosecution suggested that the owner was attempted to recoup her losses. 

A look at the foreclosed estate’s real estate listing hints at just how dire the situation became. The listing agent proclaims at the top of the post, “BRING ALL OFFERS - BANK WANTS PROPERTY SOLD NOW!” While it’s unclear how much of the stolen furnishings were replaced, the mega-mansion actually found a buyer in July 2010.

   

Drug store a landmark or eyesore?

Drug store a landmark or eyesore?

Helena Hicks remembers it vividly. It was a cold January day back in 1955. The 20-year-old Morgan State College student was at a bus stop with her friends at Lexington and Howard streets on the west side of Baltimore. Hicks said she and her friends were cold, hungry, tired -- fed up.


"I've got to be able to have something else in my life besides the constant obedience to segregation," Hicks remembers saying.
With that mindset, Hicks and her friends went into Read's drug store and took a seat at the lunch counter. The problem: the retail chain had a policy of not serving African-Americans.


So there they were, sitting at the counter asking to be served, only to be told "no." The students sat there for close to 30 minutes before deciding to leave, Hicks said. Police were never called, and there were no violent confrontations -- only plenty of stares and a few choice words thrown at them.


"We were told to get out, and when we realized the constant 'get out, get out, we don't serve Negroes in here,' we left," said Hicks.


But the students made their point, and it had a snowball effect. Soon, similar sit-in protests were held at other Read's stores, and within a month the store chain changed its policy.


"We were just jubilant. ... It was really the beginning of opening up of downtown Baltimore to integration," Hicks said.


More than 55 years after that impromptu sit-in, Hicks and many members of the Baltimore community are trying to save the vacant Read's building where it all started. City officials and a developer have a $150 million model for a mixed-use development they would like to turn into reality.


"The goal is 300 units of residential, 178 square feet of retail, commercial space, a 120-room hotel and 725 parking spaces that would support both the residential and the retail," said Kathy Robertson of the Baltimore Development Corporation.


Several people in the community welcome the development but say there should be a way to save what they consider a big part of Baltimore's history. Community meetings are being held, and the city as well as the developer say they are working on a compromise.
"The developers already said they in no way want to disrespect the history in the neighborhood or the event," Robertson said.


Meanwhile, Hicks and other community activists are keeping up the pressure. Some schoolteachers are even using this as an opportunity to teach their young students about what happened back in 1955 and how it impacts them today.


Middle school teacher Peter French was just starting to touch on the topic of segregation at school when he heard about the fight to save the old Read's building.


"I said, 'Well, we're learning about people stnding up for their rights, so let's go down and do what we can,'" he said.


French and his students made signs and picketed outside of the building earlier this month.


Hicks, now 76 years old, heard about the students' plans and joined them.
"We have to keep this building up because once you lose history, it's gone forever," she said.


For years, Baltimore has affectionately been known as Charm City. If this building is taken down or if an acceptable compromise isn't reached, some people in the community say, Baltimore stands to lose some of that charm -- and a big part of its civil rights history.

January home sales decline 23 percent

Dayton-area home sales in January mirrored sales numbers of a year ago, representing a slump in sales from December highs.

In January, there were 554 single-family home sales, a difference of only five sales from January 2010 when the area recorded 559 sales, according to the Dayton Area Board of Realtors. In December, sales were 23 percent higher, with 718 transactions on the books.

Bob Wilson, DABR president, said sales typically are lowest in January and February.

“Increases are usually seen in the spring, when families begin looking again and traffic through available homes picks up,” Wilson said.

Not only were sales down year-over-year, but sales volume, and average and median sales prices, also experienced declines.

Sales volume dropped to $56.4 million — a 10 percent decrease compared to January 2010 — and average sale price was $102,000 — a 9 percent decrease. Similarly, median sale price fell 13 percent year-over-year to $79,000.

“Sale prices are historically lower during slower, bad weather months and with school in session,” Wilson said.

The supply of listings at the end of January was 15 months — or 8,428 properties. Inventory levels were up 8 percent from January 2010, when the area had a 14-month supply.

This Is Not a $1 Million Home ...

This Is Not a $1 Million Home ...

Homeowner Sues Mortgage Company, and Wins!

All Patrick Rodgers wanted was for someone at his mortgage lender to talk to him. But when the bank ignored repeated requests, the Philadelphia homeowner sued -- and won.

According to Rodgers, all he wanted was for the lender to answer his questions about its demand for him to purchase more home insurance.

Yet the bank still hasn't responded, Rodgers says, even though it has paid the $1,300 judgment.

Rodgers, a concert promoter who in January 2002 purchased a 6-bedroom, 3-bath Tudor-style home for $179,000, did as all homeowners do when they obtain a mortgage: He purchased home insurance to cover its replacement value should it ever be destroyed in a fire or other catastrophe.

About seven years later, his mortgage lender, Wells Fargo, asked him to insure the home for $1 million after an insurance inspector valued it at that amount. The amount was an estimate of what the home would cost to replace, reported the Philadelphia Inquirer. Rodgers balked. Wells Fargo went behind his back and bought him a policy, so Rodgers sued when the bank refused to respond to his inquiries.

Although home values have waxed and waned since he purchased his house in the Wynnefield Heights neighborhood, there's one thing this founder of Dancing Ferret Concerts knows for sure: The 1925-built home has never been worth $1 million.

"The area we are in is kind of close to the wrong side of the tracks," he told AOL Real Estate in a phone interview. "It was comparable to other prices in the neighborhood at the time." In fact, property records we dug up show that a smaller six-bedroom home across the street sold for $185,000 just seven months after Rodgers moved in.

"If you moved the house about five minutes west of here the price would go down about half and 15 minutes the other direction, it would go triple," he said.

Wells Fargo never sent Rodgers an appraisal report showing its estimated $1 million value, he says. To substantiate a change in the replacement value, up or down, a person or entity must show proof of the changed value through an "accepted industry rebuild estimators or an appraisal with the cost to replace new on the dwelling," says Mark Boyer, CEO of Foundation Financial Group in Jacksonville, Fla.

"The market value and the insurance coverage amount are in no way related," says Mark D'Agostino, the owner and president of R.F. D'Agostino Insurance Agency Co., in Brockton, Mass., outside of Boston. "The coverage amount is the cost to rebuild the home in the event of a total loss; the homeowner can ask that the replacement cost be reevaluated at any time. Going up is generally easier to do than going down."

Outside of some exterior repairs he did to the home a couple of years after he purchased it, Rodgers hasn't made any other upgrades or changes that would warrant such a drastic increase in value.

So Rodgers said no to Wells Fargo's request for additional insurance. Then Wells Fargo bought it for him, and his insurance company notified him that the new policy would cost him an additional $500 per month above his previous policy.

Rodgers wrote to Wells Fargo explaining his situation and demanding an explanation for its actions. By law under the Real Estate Settlement Procedures Act, Wells Fargo had 20 days to respond. When it didn't, Rodgers wrote another letter letting them know they had missed the deadline, and giving them one more chance to respond. After another 60 days had passed and Wells Fargo missed another RESPA-mandated deadline, Rodgers moved for a judgment against his lender for failure to respond. His reward: a default judgment of $1,000 since a Wells Fargo representative never appeared in court.

When the lender didn't pay up, Rodgers contacted the Philadelphia sheriff's department for help. The sheriff scheduled a sale of the items in a Wells Fargo office to cover the monies owed to Rodgers. That, along with media reports, got Wells Fargo's attention and they sent Rodgers several checks totaling the approximately $1,300 they owed him for the RESPA violation, court costs, sheriff's levy, and scheduled sale. (The sheriff's sale has been cancelled now that the bank has paid.)

Rodgers has received the money, but no phone call or letter. "No one from Wells Fargo has reached out to me yet and that was the point for me in initiating all of this. It wasn't that I wanted to litigate and get $1,000. I just wanted someone from Wells Fargo to talk to me."