I have always wondered about all the costs that are part of the closing cost of real estate, and I was not the only one wondering about that. Read all about it here , and there is plenty of material that indicates the differences in closing cost… however, it is hard to put your finger on each of the costs and ask yourself are you being screwed.
In this article there is a good break down of what each cost means. I personally think everyone should get educated in questioning your Mortgage Broker or Real Estate Broker when you get a good faith estimate and try to get answers for each of the cost items.
Here is a hearing by Department of Housing and Urban Development (HUD), where one of the Scam items “Title Insurance” is discussed… to summarize Title Insurance is suppose to protect the buyer against any other loan on the property that is being purchased. However, most realtors and mortgage brokers “recommend” a title insurance company for closing (You know what I am talking about when you are close to buying the property the realtor usually says “Well, I have use ABC Title Insurance company before and they are very reliable!”), the title insurance company usually takes a chunk of the premium you pay and gives it back to the realtor for bringing you in to the office for closing! This is against the law… of course the realtor is not doing anything illegal until the payment is accepted by him/her from the title company. The above hearing is for a case related to the above.
The bottom line… shop around, title insurance is a good thing and there are many providers call a couple of them and see which of those offers you a good price.
Do the same for all the other costs… you will easily reduce the cost of buying a property considerably (read 20% to 30%)!