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Understanding closing costs

(WWBT) - How much do you know about buying a new home? A Hopewell, VA couple found out they didn't know enough, and closing on their American dream quickly turned to a nightmare. So how do you keep it from happening to you?

Closing on a new home can take some time, but the couple hit the four-month mark before they decided something was terribly wrong.

"Won't return my calls. Doesn't fax me the right information that I request," Valerie Keffer said of the mortgage broker she and her husband found to handle the closing. "And I just feel like when we first started the numbers were a little lower, and now he's trying to go up on the interest rate."

As Keffer and her husband sifted through their documents, Valerie wanted to warn others not to make the same mistakes she did.

"The underwriting fee was high, and I also don't really understand the yield spread premium," she commented.

At the outset, the Keffers got a good faith esitmate, but without any signatures. She expected closing to take 45 days. That ended up being four months.

She says since they got started, fees and interest rates have gone up unexplained.

"The wire fee, $15. I asked him what that was for; he said that's for the bank to wire the money," Valerie said. "And I researched online, they don't even charge to wire the money."

Mia Morgan of Housing Opportunities Made Equal said, "There is no reason once a loan is approved that it should drag on for that long of a period."

She says that while some of the numbers seem a bit unusual, all the information does seem to be in order.

"They are supposed to give you a good faith estimate that will itemize all of your list of the fees and what the loan costs are to you," Morgan said.

And that's where a home buyer has to speak up.

"Ask questions," Morgan said. "If you don't understand, don't sign anything and just ask questions."

Morgan says the broker is supposed go through your estimate line by line, breaking down everything in detail.

"They're supposed to explain to you why you're paying it and where it's going," she added.

Even then, Morgan suggests taking home documents that could tie up thousands of dollars to make sure you understand or to generate more questions before you commit money, or in Valerie's case, a lot of time

"Check out the mortgage lender, the mortgage loan officer and get referrals and make sure they're legitimate," she advised. "Check the Better Business Bureau and gets some references."

The Keffers did finally close on their house. It was more expensive than they later learned it had to be.

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