You’ve saved up the money for a down payment. It’s finally time to make your dream of owning a home a reality. If you’ve done your due diligence, you’ve shopped around for a mortgage and secured a great interest rate. Did you know you can save money on your closing costs? Here are three ways.
1. Shop around.
Lenders must provide you with a three-page loan estimate that includes your closing costs. These fees generally add up to five percent of the purchase price. You can use these estimates to shop around and save thousands of dollars. You can also negotiate to have one lender match the lower closing costs of another.
If you’re already contracted to purchase a home, please let your Realtor know if you decide to change lenders. There are contractual financing terms and deadlines that must be met.
Compare other costs, including closing attorneys, pest inspectors (CL-100), and title insurance providers.
2. Evaluate and negotiate.
Once you’ve received the Loan Estimate, go over it in detail. Ask the lender what each fee covers. This is an excellent way to discover if the estimate has been padded with unnecessary or redundant costs. At this point, you can negotiate to have some of these fees reduced or removed.
Three days before closing, you will receive a Closing Disclosure. Verify the fees listed on your loan estimate match those on the closing disclosure. If they’ve increased more than the standard limit of 10 percent, your lender is required to reimburse you the difference.
3. Ask if the seller will share the costs.
Another way to save is to ask if the seller would be willing to contribute to your closing costs. So that you know, this request would be part of your offer terms. It isn’t advisable to ask if you suspect there will be multiple offers. But if a seller is motivated, they may agree. Check with your lender first, as some have caps on how much a seller can contribute to closing costs. You can also request that the seller pays for certain services, such as the home inspection, pest inspection, and HOA transfer fees. Ask your real estate agent for their recommendation on your situation’s best course of action.
Enlist the help of a pro.
Navigating the home-buying process can be daunting. That’s why it’s helpful to have a trusted professional at your side. A knowledgeable Realtor can help you through the closing process. They can help find ways to save you money in the long run.
Learn more about home loans with our free Mortgage Guide.
Susan Matthews is a Realtor and principal of The Matthews Group with Coldwell Banker Realty in Mount Pleasant, South Carolina.
