So who wants to pay all those closing costs, anyway? Who needs an attorney or a processing fee? After all, you're in command, right?

The fact is that some closing costs can be negotiated down or even eliminated altogether while other closing fees are non- negotiable.

When you apply for a mortgage with a lender or you get a rate quote, you'll typically ask for their good-faith estimate of closing charges, or simply the “Good Faith.”

By law, a loan officer is required to give you this Good Faith immediately when you take a loan application face to face or within three business days of receiving a loan application online, by mail, or by fax.

The Good Faith is a form that attempts to disclose to you, all in good faith, the possible costs you'll encounter when you go to closing. Sounds fair enough, but beware: Some loan officers will manipulate the Good Faith and try to trick you into using them instead of their competition.

The Good Faith is divided into different sections and line- itemed from top to bottom beginning with item number 801, reserved for an origination charge, all the way through to item 1320, for a pest inspection. The form can be intimidating at first glance. But if you look at it in sections, it becomes a tad more readable.

The first section (the “800” section) is reserved for items payable in conjunction with the mortgage — things such as appraisals, points, credit report, tax service, processing fees, origination charges, and so on.

Section 1100 (I know it's not directly after 800 numerically but it is indeed the second section on the Good Faith) includes all title and tide-related charges, such as escrow or closing fees, attorney fees, and document preparation charges.

Section 1200 is reserved for government recording and transfer charges and tax stamps.

Section 1300 is essentially anything that doesn't fit into the listed categories so far and would include things such as pest and property inspections. Surveys would also belong here.

These sections are nonrecurring items, meaning they are one-time charges. This is compared to recurring items or prepaid items, meaning charges that will occur again in the future. These charges come next with the 900 series; this is the area where property taxes, mortgage insurance, and interest charges will be listed. Finally, section 1000 lists items for any escrow or impound accounts that need to be established.

At the very end of the form it says, “Total Estimated Settlement Charges.” Prepaid and nonprepaid items are subtotaled and totaled.

Most people's eyes go straight toward the last line. Unfortunately they don't read the entire document or take note of the different service providers.

Even if you do review the entire document, remember, this estimate comes from a loan officer from a mortgage company, not from your attorney's office or the title agency.

A loan officer can only control her own closing costs, not those of third parties. She can only provide an estimate. A sneaky loan officer can trick you into thinking you're getting a great deal by low-balling third-party estimates.

Here's an example of how a loan officer can make her estimate appear better than her competition by manipulating third-party charges.

Lender A

Lender B


$ 350

$ 350

Credit Report

$ 20

$ 20





$ 400

$ 400




So far, Lender B (with the sneaky loan officer) appears higher because he's charging $1,000 more in points. But now let's review some other charges on the Good Faith:

Lender A

Lender B


$ 300

$ 100


$ 500

$ 100

Title Insurance

$ 800

$ 175


$ 450

$ 200


$ 200

$ 50



$ 425

Grand Total



Lender A looks more expensive by $825, so it's a no-brainer, right? Wrong. Lender B intentionally low-balled the nonlender charges while increasing her own.

Next stop: your closing. You arrive at the settlement table and the first thing you'll see is the final settlement statement with everyone's charges on them. Closers make sure this is the first document you'll review because it's usually the one that causes problems.

But you notice something: While Lender B's lender charges were in line, the nonlender charges add up to $2,250 and not $425! So you call the sneaky loan officer from your cell phone and demand to know what's up.

“Sorry,” the loan officer replies, “I don't have any control over attorney or escrow charges. They are what they are. It says right there on the sheet that those are only estimates.”

Do you walk away from the table and risk losing the property and your earnest money deposit, or do you grit your teeth and sign your papers? I thought so. And as you sign, you vow never to refer the loan officer to anyone. Not that she would care. Loan officers like that don't stay in business for very long.

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