The mortgage closing cost is the buyer’s last hoorah before sealing the deal for their new home. It’s not as easy as it seems. Closing fees range from about 3% to 6% of the mortgage. That’s a lot of money! If we’re talking about a $300,000 home, that costs somewhere between $9,000 to $18,000. Crazy, right?
It might seem like a good idea to just pay for it and get on with moving into your new house. But, you might want to hold your horses and do some research. Don’t let your impulses take over. The money you’ll save from here can buy you new furniture for the house.
We have gathered some tips to help you reduce your mortgage closing cost:
1. Breakdown your loan estimate form
The lender will be giving you a loan estimate form within three business days. This is after you have applied for a mortgage. Inside the form, it indicates a detailed itemized list of costs. Here, you can find your loan amount, interest rate, and monthly payments.
You can compare lenders’ loan estimate forms to weigh which one is the best for you. The vendors listed on the form are the lender’s preference. You can dig deep and do your research for lower costs.
2. Push back your lender fees
Lenders charge loan costs that include origination and underwriting. Watch out for fees that are very vague. You can ask your lender to take them out. It never hurts to ask.
That’s why it’s advisable to compare with other lenders. Try and get it before submitting your application so that you will not feel pressured.
3. Try to get new vendors
When you get your loan estimate, find cheaper alternatives for the vendors it offers. You can do this as soon as possible because your vendors need time to process the service.
Being able to find lower-cost vendors might save you hundreds of dollars. Your lender might give a few suggestions but it is best to do your own research.
4. Try a ‘no closing cost mortgage’
If you are short on cash, a no closing cost mortgage might be for you. The closing cost you didn’t pay upfront will reflect on your monthly mortgage payments.
5. Ask your bank for discounts and rebates
Some banks offer incentives to be able to attract borrowers. These rebates can take off a few hundred dollars. It’s such an easy thing to ask for. You never know what good deals you will be getting.
You should realize by now that all closing costs are still negotiable. Asking questions is going to be your best friend. You can lower down the charges by asking for discounts and rebates. Equip yourself too with proper research to be able to compare fees and charges from lenders. Don’t shy away from shopping around from one lender to another. You can put your money into cozying up to your new home instead of paying off the mortgage closing cost!