Buying a home is likely the most expensive purchase you’ll ever make. From the down payment to moving costs and insurance, the entire process is likely to take a large bite out of your bank account. That’s why it’ll pay to try and cut costs during the process wherever you can, and one expense you could save on is the closing costs.
Closing, or settlement, costs are expenses over and above the price of the property. Both the buyer and seller incur some of these expenses when transferring ownership of a property. Who actually pays, however, often depends on local custom and what the buyer or seller negotiates.
Closing costs typically range between 2 and 5 percent of the total home purchase price, which adds up to thousands of dollars. These costs normally cover title insurance, loan points, escrow or closing day charges, property taxes and document fees, among other expenses.
So, how can you save on closing costs? Below are five quick tips:
1. Haggle with the seller. He or she may be willing to pay all or part of the closing costs. A real estate agent can help negotiate and will work hard for you.
2. Nab a no-point loan. You may have to pay a higher interest rate, but if you are strapped for cash and can qualify for a higher interest rate, you may find this type of loan can significantly reduce your closing costs.
3. Grab a no-fee loan. Although the fee is usually wrapped into a higher rate loan, it does offer one advantage–you get to save on the amount of cash you would need up-front.
4. Secure seller financing. These loans typically avoid the traditional fees or charges imposed by lenders.
5. Shop ’til you drop for the best deal. Every lender has its own unique fee structure; you are bound to find one that works for you.
This article is intended for informational purposes only and should not be construed as professional or legal advice.