Buying a home is exciting! You start with a decision that you are ready to own something major of your own or have a desire to start fresh in a new location. The inevitable scrolling through beautiful homes online and finding your perfect dream home follows, and then things get serious. You find a reliable lender to discuss how much you can afford, and the financial details come streaming at you. Buying a house can be complicated with many variables such as interest rates, lender fees, and title fees. But the cherry on top is the total closing costs, i.e., the total amount of cash-out-of-pocket you will need to bring to the closing table. Do not let this alarm you. As with most things in real estate, closing costs can be managed and negotiated.
To start, always remember you have options. Keep in mind as you move through the process, that shopping and comparing are well within your rights as a buyer. Here are a few ways you can ensure you are getting the best deal on closing costs.
Shop around and compare your loan estimates. Loan costs vary among lenders as well as rates. Talk to several lenders about what kind of fees they will charge and always ask for the finalized “Loan Estimate,” not the closing costs worksheet. Take the time to compare at least three Loan Estimate sheets before making a final decision on which lender to work with.
Know the services you can shop for. Take note of the fees you can shop for and discuss those fees with the loan officer and your REALTOR® from the very beginning. It is perfectly acceptable to shop around, negotiate those fees, and to ask for discounts. Here are a few costs to take a close look at:
- Title fees – title search, insurance binder, lender’s title policy, settlement agent fee
- Lender fees – application fee, attorney fees, recording fees, underwriting fees
Outside of these title and lender fees, you may also encounter survey and inspection costs. Ask your trusted REALTOR® for recommendations and compare the prices before committing.
Closing date. The closing date is a lesser-known factor of the closing cost total. Lenders require a buyer to prepay the interest on their loan, so the later in the month you close, the less prepaid interest you pay at closing.
Ask the seller to pay closing costs. While fees charged by the lender are negotiable, so is who pays the bulk of the closing costs between you and the seller. Ask the seller to pay the closing costs on your behalf. If it is not something both parties can agree on, you can also ask the lender to roll part or all of the costs into the mortgage itself. It will cause the monthly payment to be higher, but it allows you to go to closing with less cash out of pocket.
You have many decisions to make as a home buyer with many variables to consider. Always remember that you have the right to take your time, shop around, and negotiate fees. Lastly, be sure to speak with a local, professional REALTOR® that can help you navigate the current market and provide reliable recommendations. If you are thinking of buying or selling in 2020 or know someone who is, we’d be honored to help any way we can! Contact The Cummings Team® today! 512-619-3186 | [email protected]