There's another money-saver on mortgages that is only whispered about among lenders and realtors.
It's called a 'STATED COST' CLOSING.
It's where you negotiate not only your mortgage rate, but also your closing costs, then get those costs locked in on your settlement statement before you sign.
Corky Neale, research and innovation specialist for the RISE Foundation (www.risememphis.org) says if you can pull off a stated-cost closing, it can save you three to five percent on the closing costs of a straight purchase or a refinance.
This is a potentially huge deal because closing costs can be a profit center for lenders and closing agents. Many of them have their own appraisers in house, so they'll hit you with high appraisal costs. Some will charge you for every fax and document. They'll come up with all kinds of fees.
To negotiate a 'stated cost' closing, first ask for your "good faith estimate." Truth-in-lending laws require that a "good faith estimate" be given to every borrower at the time of the loan application - with the estimated loan rate, monthly payments and all closing costs. Check out the closing costs on that estimate and ask the lender or closing agent to explain the charges.
One of those closing costs will be mortgage title insurance. In Mississippi and Arkansas, title insurance is not regulated, so you can shop title insurance companies for the best rate on that closing cost. You do not have to go with the title insurance company that works with the closing agent. If it's a loan on a Mississippi or Arkansas home, and the closing agent or lender insists that you must work with their title insurance company, then hold off on signing the loan until you've had a chance to compare that closing cost with other title insurance companies.
Tennessee regulates mortgage title insurance, so you can't negotiate that cost. But Barbara Gardener, attorney for Chicago Title Company, tells me you can ask about what's called a SUBSTITUTION LOAN RATE. A lender, along with its title insurance company, may offer a better loan rate depending on how many years you've been paying on your current mortgage.
You just have to ask!