If there’s one thing that often takes first-time homebuyers by surprise in the whole home-buying process, it’s closing and the amount of money needed to finalize the transaction. These fees can add up quickly and overwhelm first-time buyers, especially those who have very little clue about what it entails. Thankfully, with just a little bit of research and planning (and some negotiating), you can save some money on these costs and use that to finish, furnish, and beautify your future home. Here are some tips and ideas.
#1 Understand what closing costs are
The first step to saving money on home closing costs is understanding what it is exactly: where the money goes and what it’s for. In a nutshell, closing costs are fees paid at the end of the home-buying process when you close on your property. These fees often include title fees, appraisal fees, survey fees, attorney fees, and more. These fees are not optional, but they are negotiable so take the time to set an appointment with your lender and try negotiating for lower fees on at least some (if not all) of these costs.
#2 Don’t be afraid to shop around for lenders
Finding the right lender for you is no easy task so don’t be afraid to shop around before finally talking business and discussing fees with one. Different lenders can offer different fees, so it’s important to compare rates and costs from multiple lenders before making a final decision. Ask for a GFE or a Good Faith Estimate. In the GFE you’ll see an estimate of all the fees you will be required to pay at closing so you can have a good idea of what and how much closing costs will be.
#3 Consider a no-closing cost mortgage
Another great way to save money on closing costs is to consider getting a no-closing cost mortgage. With this type of mortgage, you’ll be able to roll the closing costs into your loan so you can save more money upfront. One thing you need to remember about taking a no-closing cost mortgage, though, is that you’ll still technically be paying for closing costs over the life of your loan so that’s one more thing to work out when planning your budget.
#4 Ask to split closing costs with the seller
If the closing costs turn out to be more than what you had hoped for or what your budget can accommodate, you can always ask the seller to split the closing costs with you. It’s not uncommon for home buyers to negotiate with sellers regarding closing costs so don’t be afraid to ask, especially if you know that the seller is motivated to make a sale and close the deal as soon as possible.
With a little research, planning, and negotiating, you can definitely save money on closing costs. These fees tend to rack up to a rather significant amount so finding ways to lower them is normal and nothing to be ashamed about. After all, there will be more stuff to spend money on for you as a home buyer after the deal is done.