6 Ways to Lower Your Closing Costs
There is no question that when you buy a house you will need to have a good amount of money set aside for it. Most everyone knows that they will need to save for their down payment, but what may come as a surprise to some is just how much they will need for closing costs. A good rule of thumb is to factor about 2 to 5 % of your loan’s value for closing costs. Here are some ways that you can potentially lower the amount that you will have to pay for these.
Review the Loan Estimate
Before you close your lender will provide you with a document that will detail all of the loan details and closing costs. This document will show you your monthly payment, interest rate and what percentage the bank is charging for fees. You may find that their fees are higher than what other banks would charge so you might want to shop around.
Double check the fees that your lender is charging for things like underwriting and origination. These are also some costs that other lenders may charge less for or could potentially be some expenses that could be negotiated. If you don’t ask, the answer is always no!
Know what You are Paying
Before you enter into negotiations, it is a good idea to have knowledge of what you are responsible for paying for. This includes things like credit report, application fees, attorney fees and the like. Also, have a good grasp on what the seller is paying on their end like real estate commissions.
Rolling in Closing Costs
Not all lenders in all situations will be open to this, but some will allow you to roll some of your closing costs into your mortgage. It is important to note that while this will save you money up front, it will end up costing you more in the end as you will pay interest on these charges as part of the loan.
Locate Financial Assistance
Some first time buyers may qualify for select programs that offer grants or financial relief in some fashion. A good place to start is to check with a lender to see if you may qualify for one of these programs. From government to non-profit organizations there just may be one that could apply to your situation and help you save.
Select Your Own Vendors
Once you secure your loan you may want to choose your own vendors to help navigate to closing. Most often a bank will automatically use the ones they normally do, but they may charge you more than someone else you can find on your end.