Can you lower my closing costs?
Closing cost trade-offs when mortgage shopping. Know when lenders offer lower costs for higher rates and the true cost impact.
What You'll Learn in This Chapter
- Why lenders offer to trade lower fees for higher rates and how this benefits them
- How to calculate the true cost difference between rate and fee options
- Scripts to get multiple written scenarios without committing to either extreme
You ask a lender if there's any way to reduce the closing costs. The lender responds: "I can lower your closing costs, but your rate will go up. Most people prefer lower fees because it makes closing easier."
But, here's what's really happening...
"Lower Fees Means Higher Rate" is a forced-choice tactic that presents rate and fees as an either-or decision. The loan officer's process is to frame closing costs as painful upfront expenses you'll want to minimize, knowing that most borrowers focus on immediate cash needs rather than long-term interest costs.
As a shopper, your counter-process is to request multiple written scenarios showing different rate-and-fee combinations, then calculate which option costs less over your expected ownership period. When lenders present rate vs. fees as a binary choice, they're hiding the fact that you can get BOTH competitive rates AND reasonable fees from other lenders—this isn't a real tradeoff.
Now that you understand the tactic, let's look at how most people fall into the trap.
➡ How People Get Trapped
Most people respond with:
Yes, I'd prefer lower closing costs. The rate difference isn't that big.
Don't do that.
When you choose lower closing costs without calculating total cost over time, you're making a decision based on immediate cash flow rather than actual expense. A 0.25% rate increase on a $400,000 loan costs roughly $1,000 per year in additional interest—$30,000 over 30 years. If you saved $3,000 in closing costs, you've lost $27,000 over the life of the loan.
The lender wins when you focus on today's pain instead of tomorrow's cost.
➡ What You Should Say Instead
I'd like to see both scenarios in writing on a Loan Estimate. Can you provide me with multiple options showing different rate and fee combinations, so I can compare the total cost over time?
Here's why this is the right approach:
- Demands multiple written scenarios instead of verbal descriptions
- Allows you to calculate break-even points and total cost for each option
- Avoids committing to either extreme without understanding the math
- Recognizes that competitive lenders should offer both good rates AND reasonable fees
The script rejects the false choice and insists on written documentation for all scenarios.
➡ See The Mortgage Script in Action
➡ Key Takeaway
Rate and fees both matter. Get multiple written scenarios from each lender, calculate total cost over your expected ownership period, and compare across lenders—not just within one lender's options.
Related Mortgage Resources
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