Negotiating Refinancing Closing Costs

by Kevin on April 29, 2009

Yesterday I told you we are refinancing with our current mortgage company.

I mentioned we went with the same firm because we already knew them, the rate was competitive, and we could negotiate on closing costs. We were able to do just that.

Negotiating Closing Costs

The original good faith estimate (which shows all of the potential costs of a loan) showed roughly $2,100 in closing costs. This included an application fee, documentation fee, and a processing fee. I was pretty sure that the documentation and processing fee were just added revenue for the bank. I didn’t want to pay those.

I also thought it was kind of ridiculous we would have to pay an application fee again. I mean we just closed on the original mortgages a year and a half ago. We’re ahead on our payments. Nothing has changed. Why do we need to reapply?

Thankfully I work with a guy that used to run his own title company — so obviously he knows the ins and outs of everything.

He went through the good faith estimate and showed me places where the lender could give in. I went back to our officer and asked for all three of the above fees to be removed.

My argument for waiving the fees:

  • We’re current (happy) customers
  • We’re paying our on time, no late payments since we’ve had it
  • We have our second mortgage with you
  • You will earn more than enough interest off of us over the life of the loan to make up for waiving a few fees

Our loan officer was polite and let me know he would have to “talk to his manager”. Okay, okay. I’ve heard that one. Just call me back.

Waived Closing Cost Fees

In the end he was able to get $500 worth of fees removed. The application fee was the only thing that had to stay because it paid for our appraisal and pulling my credit scores. I wasn’t thrilled with that, but hey I could then know my credit scores.

In the end we still come out ahead. I’ve said this time and time again: just ask for the discount. I double checked the numbers with a knowledgeable person, and asked for the fees to be removed via e-mail. The whole process took all of 15 minutes.

This is going to sound like one of those car insurance companies, but in 15 minutes I saved $500. Or if you prefer to look at it this way $500 divided by $2,100 is 23.8%. That’s a ridiculous easy cost savings. Don’t be afraid to ask — just do it.

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{ 5 comments… read them below or add one }

Garry - thisimprovedlife April 29, 2009 at 7:03 am

Well done Kevin. It just goes to show, you don’t ask, you don’t get.

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Do You Dave Ramsey? April 29, 2009 at 8:42 pm

Good work… sometimes just asking goes a long ways…. of course so few people pause to notice the fees much less question them

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Irina I April 29, 2009 at 10:28 pm

Congratulations! And thank you for sharing. It is very helpful to hear such sound financial advice in an accessible and easy-to-understand form. I always look forward to more posts from you.

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Golfing Girl April 30, 2009 at 8:13 am

We did the same thing with Direct TV. A few minutes on the phone saved $22 in shipping being waived and a $10/month discount for a year. A few minutes carefully spent can add up to lots of dollars in your wallet!

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Kevin May 3, 2009 at 1:56 pm

@Garry: The beautiful thing is this applies to EVERYTHING. Asking for a discount all of the time is bound to work somewhere.

@DYDR: Yea, and that’s sad. “Oh, you’ll just roll the closing costs in so I don’t have to pay anything now? Sweet!” –> Immediately upside down on the house.

@Irina: Thanks for the really kind words. Awesome!

@Golfing Girl: Yea I’ve saved something like $300 per year with literally just two or three phone calls recently. Really adds up.

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