Closing Cost Scams: Watch Out NOW!

Folks, it happens everyday. You might even be reading my article thinking... I may have been scammed. Well, maybe. There is always "that" situation you get into when somebody knows a lender or your realtor knows a lender that can give you a good deal. But is it really a good deal?

More than likely the person telling you about the lender is gettting a cut under the table without you ever knowing it. Bill Cox, a denver resident, was house hunting with his agent. He started out the good way by getting quotes from lenders online, but continued with who his agent knew.

By the end of the deal it cost Bill thousands of dollars in fees and over 10K of the life of the loan. His buddy's mistake? Not quite. His buddy was getting and extra 2 grand under the table for "recruiting" Bill. Bill had no idea and thought he could trust his agent. Wrong. Don't let this happen to you! Please.

If you have ever bought a house you know of the ups and downs it has. Very exhausting to say the least. You have numerous fees that makes you very confused. They are all outlined in your HUD-1 document, the mortgage settlement statement you get the day you close, as required by the Department of Housing and Urban Development.

The fees include title insurance, settlement fees, appraisal fees, processing fees, document-preparation fees and your broker's commission. Adding up to 1000's of dollars in the end and 100 million nationwide. Wal-Mart continues to make products cheaper, yet buying homes gets more and more expensive. What's the deal?

Well as CNNMONEY.COM stated, Regulators have begun to ask why. The Department of Justice sued the National Association of Realtors last fall, claiming that its rigid rules for home listings artificially inflate commissions. And state insurance commissioners in California, Colorado, Florida, Maryland and Ohio have recently uncovered what they say are networks of sham title insurance companies set up to hide illegal rebates to banks, builders and realtors in exchange for steering business their way.

Colorado insurance regulator Erin Toll stated there are probably more than 100 "shams" -- her word -- in Colorado alone. Yes, right here in Colorado, its pretty bad. The industry just isn't operating properly. In normal markets, fees should be decreasing, not your bank account. So before you jump into a lender's scam, do your homework. Make people work for YOU, not you work for them.