Do you want to reduce your closing costs? Well, you came to the right place! This article will give you ideas on how to reduce closing costs when buying your first home.
If you are planning to buy a home for the first time, saving for the home down payment takes several years. It also takes 20 to 30 years to pay for the home loan. Aside from the down payment, you need also to prepare for the closing costs.
The closing costs can be associated together with home buying. The costs came from the real estate agent, mortgage lender, local government, and home insurance company. These costs are called charges that you must pay at the closing due date.
Luckily, there are lots of ways to reduce closing costs when you are planning to buy a home. Use several tips below and familiarize yourself regarding the home buying process. These could help you assure that you are not paying more than the closing costs itself.
The following are the tips on how to reduce your closing costs;
- Talk to seller
The closing costs vary around 2 to 5% of the total price of the home. The amount must be added to the down payment of a home. That is why most home buyers are trying to find means on how to reduce closing costs. This is because the amount of money plays a significant role on their budget.
Buying a home, deals with series of negotiations. The first thing you should negotiate is the seller. However, one way to help you reduce the closing costs is to negotiate the cost of the home. This is due to the fact that the closing costs depend on the overall total price of the home.
- Shop for lenders
If you are a home buyer, it is normal to shop for the best lenders that offer the best interest rate for the home loan. However, when it comes to closing costs you must shop around to find the lowest fees. Most lenders charge fees at the closing time, but the amount they charge usually vary.
- Choose no point mortgage
By choosing a no point mortgage, you can save lots of dollars on closing costs. The mortgages with 1% point, means you need to pay at least one percent on the total price of the home. However, choosing a no point mortgage is beneficial for homeowners who want to own a home for a short period of time.
- Schedule the closing costs at the end of the month
Most lenders collect the interest for the recent month. So, it is best to set the closing date possible late to make sure that the amount is quite low. The closing schedule at the beginning of the month, means paying of the interest for the whole month. However, setting the closing costs at the end of the month means a small amount of fraction of the interest is being paid.
When starting to look for a home, it is a good idea to picture out the amount of money needed for the closing costs. There is a closing cost calculator online that could help you. By using this calculator, you can estimate your closing costs when buying a home.