Mortgage closing costs can add a significant amount of cash that you need to bring to the closing table for purchasing a home or refinancing, and this is money that does not add equity into the value of your home. These costs include things like the loan origination fee, loan discount fee, funding fee, underwriting fee, etc. So how can you save money on closing costs?
Things You Will Need
Negotiation Skills and Information
Fee Sheets for Title Insurance Companies
Step 1First thing first: if you are eligible for a VA (Veteran Administration) loan, then you may wish to consider taking one instead of the standard loan in order to save money on closing costs. Please note that you will have to continue to upkeep an escrow account even after you have 20% down if you choose to do a VA loan.
After you inspect your new home, make note of imperfections. Are the appliances out of date? Does it need a new paint job? Make sure all of the work that is needed to be done you can handle, and use this is a bargaining chip. Ask the seller to chip-in by paying part of your closing costs on the day of closing. Try to have them pay costs that are not tax-deductible, and you pay the costs that are tax-deductible, such as property tax left in the year.
Step 3Many of the fees involved in buying a home can be negotiated (fees that can be negotiated are typically found in the 800 section of your closing document HUD). Administrative fees, funding fees, and underwriting fees can all be negotiated. For any fees that sound funny, like a lender inspection fee, ask the lender to explain how this has cost them money. If there is not a clear explanation, ask for it to be removed.
Step 4Some closing costs are services from outside vendors, such as surveyor costs and credit report costs. Many lenders "pad" the fee that they are charged, so ask to see the receipts from these services. That way, you can ask to only be charged that rate.
Shop around for title companies by asking for the title company's fee sheet. Pay particular attention to the title insurance amount as this can vary greatly between companies.Array