Real Estate Closing Services You CAN Shop

The process of closing on your new home

Estimates of closing costs can be very different from one lender to the next because closing costs can add up to thousands of dollars. You will have to pay third-party providers for a portion of the closing costs. You can shop around for these costs on your own.

It's possible that lenders or real estate agents will recommend service providers they know, but it's also possible that these service providers won't be the best deal. If you look around for services related to closing, you may find better deals and save money.

What should we do next?

Use your Loan Estimate to figure out what services you can go shopping for.

For any of the services listed in section C on page 2 of your Loan Estimate, you can shop around (see a sample form). There are many different kinds of specialized services that different lending institutions offer. Most of the money you'll spend in this category will go toward fees for title services, and most of the time you'll be able to shop around for them. Title services include title insurance, title searches, and any other fees or services related to issuing title insurance. With title services, you can also get title insurance. In most places in the country, the cost of the closing agent who takes care of your closing is included in the cost of title services.

Find service providers who might be closing.

Your lender must give you a list of businesses in your area that offer the services you need so you can compare prices. You might want to hire one of the companies on the list. On the other hand, if your lender is willing to work with the company you choose, you might be able to pick one that isn't on the list.

Ask local friends or family about the companies and people they worked with to get different types of closure services. Some service providers might offer more than one type of service.

You can also use the internet to look for service providers.

Call service providers.

Ask for an estimate of how much it will cost, as well as references from people who have bought from them recently.

Be sure to look at the sources. Ask how well the company answered their questions and how it handled problems.

Think about whether you want to buy owner's title insurance or not.

Most lenders will require you to get lender's title insurance to protect the money they loan you. You should seriously think about getting an owner's title insurance policy to protect the money you've put into the property.

Choose the closing service providers, and then let your lender know.

Choose vendors who can meet your needs without going over your budget and who have a good name.

Set your closure time and date.

When deciding on a date, make sure to think about the following:

• Does the purchase contract you have say when the closing must take place?
• Is there a certain date by which you have to leave the place you are living now?
• When does your rate-lock expire?
• Will your lender be able to finish the loan approval process in time for the deal to close?
• Is your closing agent working on other deals for other people at the same time? As we get closer to the end of the month, it's possible that more people will try to close deals. You might want to think about having the closing at the beginning or middle of the next month.

Are you thinking of buying a house?

What you should know

Most of the time, one of the service providers you can choose from is also the person who will close your deal. The person or company that will do the closing may be different depending on the state where the deal will be made.

Wherever you are in the United States, the closing is often done by a settlement agent who works for a title insurance company.

In other states, especially those in the West, the person in question is called a "escrow agent," and the parties usually sign the contracts in different places (rather than meeting in person).

In many states, especially those in the Northeast and the South, each party is required to have their own closing attorney.

Talk to a lender or a real estate agent to find out what's going on in your state right now.

Most lenders already have a service provider they work with if you don't pick your own.

Don't assume that the service providers your lender chooses are good because they have low prices or good because they do good work. Since many default or recommended providers are related companies to the lender, the lender may have a financial reason for recommending them. In other words, the lender might make money if they recommend them. When you compare prices, you can save money.

Even though it might not seem like much compared to the price of the house, the fees for closing services can add up to a lot.

Some research shows that borrowers who shop around for closing services can save up to $500 just on title services by comparing prices from different companies. That's $500 you can use to make your new home feel more like yours by getting new paint, furniture, and making other changes.

Different title insurance disclosures may be required by state laws.

At the time of closing, your title insurance company might give you a detailed list of the fees they charge. Whether or not they do this will depend on the state where you are buying your home.

This list may be required by state law, and the information on your Loan Estimate or Closing Disclosure may not be the same as what is on this list. That doesn't mean you'll have to pay more.

When you add up all of the title-related fees that your title insurance company gives you, the total should be the same as what you see on your Loan Estimate or Closing Disclosure for all title-related costs.

When comparing the prices of different title insurance policies, make sure to look at the "bottom line total."

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