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How to save on closing costs

A family consulting to their real estate agent about buying a new home

If you’re looking at houses for sale in Houston County, GA, you’re probably keen on being part of this thriving community. But what you might not be too keen on is paying the hefty closing costs that come with buying property here.

With closing costs accounting for up to 5% of the purchase price, it’s definitely not pocket change. Fortunately, there are ways to lower it:

Ask for the loan estimate form

Lenders typically provide a loan estimate form after you complete a mortgage application, but some will happily furnish you a copy before you even apply. Aside from the loan amount, interest rates, and monthly mortgage payments, this document also includes a detailed breakdown of the closing costs.

Having the loan estimate form offers buyers important advantages.

  • First, it allows you to compare closing costs among lenders to see which one offers the best deal
  • Next, it lets you spot smaller items that your bank could either waive or give a discount on, such as courier fees.
  • Last but not the least, it lets you check for things you may be paying for twice – for instance, “processing fee” and “underwriting fee” mean the same thing, but they might be listed as separate items in the form

Negotiate with your lender

When buying a house, always remember: it never hurts to negotiate. And this applies when negotiating with your mortgage lender as well. Typically, lenders will charge you a loan origination and underwriting fee, which covers all the associated costs for processing your loan.

  • Ask your loan officer if they could reduce processing fees
  • Ask if your bank can match a loan estimate you may have received from another lender
  • Ask your loan officer about unfamiliar or vague items you find in your itemized closing costs – they might be willing to drop a few of these miscellaneous fees as a gesture of goodwill

Look for your own vendors

Among the fees included in your closing cost are pest inspection, property survey, title search, and lender’s title policy. For your convenience, the lender will include suggested vendors for these services and their corresponding fees in the loan estimate form.

However, you don’t have to go with your lender’s recommendations – oftentimes, you can find a vendor who can render the same service for a lower price. You can ask the lender if they have a list of other vendors to choose from or simply do an online search. For your reference, a section called “Services You Can Shop For” is included on the second page of your loan estimate form.

Take advantage of perks and grants

Are you a longtime client of your bank? If so, it might offer help with closing costs should you take out your home mortgage with them. Other banks may also offer rebates or discounts that can provide you the extra little cash you need.

You can also take advantage of certain government programs to cover part of the closing costs:

  • Qualified first-time buyers in Georgia can receive cash grants that can go towards paying a down payment or the closing costs.
  • Likewise, veterans who apply for loans through the VA can get funds to help them purchase and close on a home

If you qualify for these programs, be sure to apply for them – that’s your taxpayer dollars working for you.

Sign your loan towards the end of the month

Each day you owe lender money, you are charged an interest rate. That’s why one of the items you’ll see in the closing cost breakdown is “per-diem interest.” Why is this important?

Most mortgage lenders set their payment due dates for the first of each month. Assuming you finalized your loan on the 15th of the month, you pay interest for the borrowed money from the 16th to 30th. However, if you sign your loan on the 29th of the month, you have to pay interest for just one day instead of 15.

Let the seller chip in

In real estate markets where there are a surplus of available homes, sellers might sweeten the deal by footing part of the closing costs. Luckily, most loans allow a seller to contribute up to 6% of the closing price as a closing credit for the buyer. Not only will this help lower your upfront costs for buying a home, but the seller can also declare the closing-cost credit as a tax-deductible expense.

With your closing costs settled, you can finally look forward to settling into your new home. But if you’re still typing, “what do you need to buy a house?” on your browser, let the experts at Warner Robins Home Search assist you. We close over 100 homes a year in the communities of Warner Robins, Bonaire, Kathleen, Perry, Byron, Macon, and Fort Valley in Georgia.

Feel free to call us, Warner Robins Home Search, at 478.832.0388 or send an email to jasonleerealestate1(at)gmail(dotted)com.