Refinancing: Reduce Those Pesky Fees

People who are refinancing home loans are advised to scrutinize the closing costs. Study the settlement statement, and object to any fees that are not warranted or justified. While the interest rate may get the most attention, other small details can add up to a significant amount of money.

In today's economic environment, it pays to sweat the small stuff. This is especially true when it comes to those annoying fees and closing costs that sometimes cause sticker shock when you refinance a mortgage. Most homeowners who are paying to refinance are doing so to save money through a more manageable and attractive interest rate, or better terms and conditions, like a fixed versus an adjustable rate. But in the process of negotiating for the cheapest loan, they often lose track of relatively minor expenses. These can add up fast and undermine the primary goal of saving, not giving away, their hard-earned money.

Steps for better refinancing fees

• Don't be afraid to ask and haggle. In today's chaotic mortgage market, lenders are strapped for cash, too. If you qualify for a refinance, it automatically puts you into a rarified category of consumers who've emerged from the past year of mortgage mayhem and meltdown relatively unscathed. You, therefore, qualify for preferential treatment in the eyes of many lenders. Ask for discounts in exchange for customer loyalty, and if your lender doesn't want to play ball, consider taking your business to the nearest competitor.
• As soon as you get your settlement cost statement, review it with a fine-tooth comb. If you don't understand a charge, ask for an explanation. If the explanation doesn't make sense, challenge the charge. Many lenders add phantom fees and random charges that they hope will slip by unnoticed, and it's your responsibility to uncover them, and protest against any that seem unfair or unreasonable.
• Compare the estimate to the actual final charges, and look for discrepancies. Doing this kind of due diligence at the closing table isn't necessarily the best approach, so demand to see an updated and final draft of the closing cost statement a day or two before you close.
• Go to the closing table with a reliable ally. Bring your realtor along, and have her double-check the figures to look for any unexpected and unnecessary costs. If something doesn't make sense, don't hesitate to challenge it. Even in the eleventh hour, it's possible to get concessions or save money, but only if you're tenaciously diligent.

You may find it unreasonable to pay for new title insurance if you had a title search done just a few years ago. But there could be a new lien on the property, and only a fresh search will discover that kind of problem. There's no harm in trying to get discounts, so ask for them. Otherwise, you might leave money on the closing table due to no one's fault but your own.