Saving on Closing Costs
When it comes time to purchase a home, or even refinance, a major component of the transaction will be the costs involved in closing a sale and a mortgage. There are expenses involved beyond the required down payment that can add up. We are going to examine a few different ways that you can be better prepared for these, and possibly save thousands in the process
1) Be aware of Lender Fees – It is not a surprise that Banks & Lenders are in the Mortgage industry to make money. The interest paid on the loan is one way they look to earn, but often they have additional fees to Apply, Originate, Underwrite, or Process the loan. A really low rate may have really high fees, and those dollars not only count the same, they need to be paid now! Homestead Mortgage’s lending partners all offer an option to pay NO LENDER FEES – Yes, it’s going to be built into the rate, but at least it’s a transparent option to consider saving some cash if desired.
2) Know your Escrows – Many homeowners have their Taxes & Insurance payments taken care of through an escrow account they set up with their Lender. When the transaction 1st closes, that escrow account is established with a deposit from the borrower, due at closing. If you are looking to save some cash here, it could be worth seeing if the lender allows an ESCROW WAIVER on your transaction. You’ll be responsible for the Taxes & Insurance on your own going forward, and you can save thousands at closing.
3) Get the Seller to Pay – This is one of my favorite options for borrowers of all levels. Most loan programs allow for a SELLER CONCESSION or SELLER CREDIT to have the seller pay for a contracted amount of the buyer’s closing costs. What it means to a buyer, is you would pay slightly more for the home, in order to have that money applied to closing. This does mean you borrow more, but borrowing an extra $5,000 is going to cost about $25/month – It would take you almost 17 years of paying $25/month to spend that $5,000 that you saved at closing, making it an attractive option to any buyer