According to a 2018 report by ClosingCorp, the national average closing costs for a single-family property were $5,651 including taxes. With closing fees typically running anywhere from 3% to 6% and housing prices on the rise, it’s often significantly more than that, which makes it essential to due some negotiating so you don’t end up paying more than you have to.
Shop Around
With so much money on the line, be sure to shop around for the lender that offers the lowest closing costs, just like you would if you were shopping for a car or any other large purchase. Finding a sweet deal in a housing market like San Diego will require a bit of research. Get quotes from multiple lenders as well as some services that are typically included in closing costs like title searches, survey fees and pest inspections. You can usually save the most on title insurance and settlement services which are often combined. These are all listed on the loan estimate form the lender is required to produce within three business days after you’ve applied for a mortgage. You don’t have to use providers the lender suggests – you can look for a better price.
When comparing costs, be sure that you have the actual, legally binding loan estimate form and not just a worksheet or fee itemization that some lenders provide. If you have a preferred lender, you might ask them to match lower closing costs offered by another lender.
Ask the Seller to Contribute
If the home has been on the market for a while or the seller needs to move quickly, consider asking the seller to contribute towards the closing costs. If you’re in one of the many areas where home inventory is low and buyers are competing aggressively, you may not want to risk it, however.
Find Out About Any Rebates and Discounts
Some banks offer their existing customers special incentives on their mortgage loans, including rebates and discounts that can help lower closing costs by several hundred dollars or more. Check with your bank to find out what it offers anything that might help cut your overall costs at closing.
Close at the End of the Month
If you sign your loan papers close to the end of the month, it can help lessen how much cash you have to bring for prepaid interest for the period between closing and the beginning of the month. You can figure out how much you’ll save by multiplying the loan amount by your interest rate. Take your annual interest rate and divide it by 365 to calculate the daily interest rate, and then multiple the daily rate by the home loan amount for the daily interest amount. Multiple the daily interest rate by the number of days between closing and payment to determine the prepaid interest charge. For a mortgage loan of $200,000 at an interest rate of 4%, it works out to about $22 a day. The closer to the end of the month you are, the less you’ll pay so by planning ahead you may be able to schedule closing at a time that means you’ll have to bring less money to the table.
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