Escrow companies hold funds involved in a real estate transaction until the mortgage is finally closed and the deal is completed. This includes funds for things like real estate taxes, home insurance and loan interest between the time of the closing and the date the first loan payments are made. Escrow companies charge fees for these services, ranging from messenger fees for delivery of documents to costs of copying paperwork. You can sometimes get many of these fees waived to reduce your payments at closing.
Ask your Realtor for a list of projected escrow fees, if not included in the good faith estimate provided in advance of closing. Mortgage loan regulations require this estimate be provided to you. Examine the fees for each service and question any that seem unusual or excessive, such as delivery fees or postage or charges for fund transfers.
Check other escrow companies for comparable fee schedules. Get your Realtor to provide names of other escrow companies and ask them for costs on similar fees to those listed on your estimate. Look for fees on your estimate that are different from those charged by other companies. Note any services that other companies provide free that are included in your escrow estimate.
Review any differences with an officer of the escrow agent listed on your estimate. Ask that any fees not charged by other companies be waived or reduced to the competitive level. Include your Realtor in this discussion; if an agent thinks escrow fees could complicate a closing, he will work to get a reduction or waiver. Have this discussion in advance of your scheduled closing, while you have time to make change escrow companies.
Make a list of fees to which you agreed and any the escrow company agreed to modify or waive. Take that with you to the closing and compare it with the fee schedule on the closing documents you are asked to sign. Don't sign any documents that contradict the charges you negotiated with the escrow agent.
- Bankrate.com: Closing Costs Come in Four Varieties
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- Realty Times: Reducing Title And Escrow Fees
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