How Can I Save On Closing Costs?

Written by Simon Campbell Posted On Monday, 14 October 2013 11:22

When you are looking to sell your home, there are a lot of fees that can be associated with it. Some of these you cannot avoid, some you can and others you can reduce. Today, we are going to look at how to reduce the closing costs on selling a home.

Since the lending industry is highly competitive, many of them are willing to offer a reduced closing cost when finalizing the sale. It's similar to buying a car in the way that you can negotiate down from a sticker price when you threaten to go to another dealership.

Use your own bank

If you are already a member of the bank that you are attempting to get a mortgage from, it will be a lot easier to reduce these closing costs. Many banks offer this as a way of customer retention (which is the most important part of business since new customers cost more to acquire.)

If you say that paying a closing cost is a deal breaker and that going to another bank is a possibility, your bank is likely to waver and give you the deal you want. It can seem like it's the wrong thing to do, but you have to be competitive in a competitive finance world.

Acquire a Good Faith Estimate

Lenders are now required by law to give out a Good Faith Estimate to anyone that is borrowing money from them. This will help prevent mortgages that may be deemed as taking advantage of customers by means of nickel and diming them.

What is a Good Faith Estimate? It is the estimate of all costs and fees that are involved with a sale, and can not exceed 10% of the price. There's a short time frame in which the lenders are required to give out a Good Faith Estimate after a customer applies, so you can quickly look to save a few hundred dollars on the closing costs.

Be assertive

Have the lender explain in detail what fees you are being charged and why you are getting charged in the first place. Too many people blindly agree to a mortgage without getting the details first.

Asking why the fees are there will keep the lender on their toes so you know you are getting the best deal and not being taken advantage of. Now, some of the fees are not actually charged by the lender, but you can possibly have them reduce the fees in order to seal the deal.

Just don't accept the first deal on the table and always ask questions. Being assertive can save you hundreds if not thousands overall.

Make it part of the loan

There is a way in which you don't have to pay any closing costs right away by making it part of the overall mortgage. Closing costs aren't always cheap and can be up to 5% of the overall cost. If you plan on staying in the house for a considerable amount of time, this may be the way to go as it is included in the monthly payment.

It's not as likely to have the closing costs reduced if you do this method, but if you are unable to dish out the large closing fees before moving into the property, this may be the only way.

It's always important to really do your homework before getting involved with a mortgage. Always shop around for the best deal that has the lowest fees and interest rates. Skipping over the details can cost you thousands over the course of a mortgage. Stay knowledgeable and you will save money in any form of business.

Simon Campbell has spent over 15 years in all the various facets having to do with real estate including sales, purchases, investment and research. His experience also includes commercial and residential property management and even real estate appraisal. He is recognized among his peers as an expert in the real estate field. Now after gaining such a wealth of personal experience, Simon has changed directions and is now sharing his knowledge and experience with others through writing on bankforeclosuressale.com blog, mentoring and consulting.
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