Buying a house isn’t cheap. It usually costs hundreds of thousands of dollars. In addition to your down payment, you also need to set aside money for other fees. Closing cost, home inspection, appraisal fee, home insurance, and property tax are just some of them.
Closing cost is equivalent to 3% to 6% of the purchase price. Considering the amount of money that is associated with buying a house, some of you are probably looking for ways save money elsewhere. The good news is that there are some things you can do to reduce closing cost.
Here are 4 ways to save on closing cost when buying a home.
Ask the seller to sweeten the deal
A desperate seller and a struggling market provide the perfect opportunity to negotiate a deal with the seller. Besides negotiating the price, ask the seller if he/she is willing to pay for the closing cost or at least a portion of it. $1,000 to $2,000 may not see much, especially if you’re buying a house that costs a few thousand dollars, but you can use the money on other things.
Negotiate fees with the lender
A lot of money is on the line with closing cost. The good news is that they aren’t set on stone. In fact, fees charged by the lender can be negotiated.
Loan officers or mortgage brokers are usually paid a loan origination fee for bringing business to the company. If you are working with a lender, try to ask him/her if there are any aspects of the fee that can be waived.
Review the loan estimate
Once your mortgage application gets approved, you’ll be provided with a detailed loan estimate. This includes a breakdown of all the fees you’ll be paying. It is important to review the document carefully and keep an eye out for fees with similar names. To prevent unnecessary fees, take time to go through each item with the lender and ask what each fee covers.
Most buyers shop around for mortgage rates when buying a house. If you are looking to save money, you may also want to speak with some local lenders about closing cost.
Get quotes from multiple lenders to see if you can find a cheaper option. Compare offers from different lenders to see who offers the lowest rate. If one lender offers a lower rate, ask the other if they can match it. Go ahead. Pit those companies against each other.