How Do I Save on Closing Costs?

Buying a new home is a great experience. You found a home where you can afford the mortgage and the taxes, but did you consider the closing costs? Depending on the price of the home, the closing costs could reach into the thousands of dollars. Luckily, there are some things you can do to save on closing costs. Follow these tips and you can spend less on closing costs and more on decorating your new home.

Get a Good Faith Estimate (GFE) from various lenders.

With a GFE, you should get a fairly good idea about how much each company will charge you for closing costs. Since this figure can differ between companies, the more research you do, the better deal you'll be able to find in the closing costs. Ask for a detailed list of fees they charge, too. If a company is unwilling to give you this information, move on to the next one. There's too much competition in the mortgage lending business to deal with secretive lenders.

Negotiate with lenders.

Before making your final decision on which company to use, find out which ones will negotiate on some of the fees. If they just flat out refuse to negotiate, that could be a signal as to the type of company they are to work with. Also, ask them to explain any fees that you don't understand. If the agent is impatient or unwilling to help you understand the fees, choose a different company.

Choose a mortgage lender.

Based on your research, you should be able to narrow down your choices to one or two lenders. But don't make your decision based solely on the lowest cost. You also want to make sure the company you choose has a strong reputation of customer satisfaction and that they've been in business for a long time. Sometimes paying a few extra dollars more for peace of mind is worth the price.

Ask if the sellers will pay the closing cost.

Since we're in a buyer's market, many homeowners are desperate to get rid of their homes and downsize into a smaller one. If their home has been on the market for a long time, they might be able to share or even pay the entire closing cost just to shed themselves of their home and get on with their lives. Even if they aren't willing to do that, it doesn't hurt to ask.

Closing costs can throw a monkey wrench into your home buying plans if you're not properly prepared for them. And since the closing cost prices are typically inflated and expensive, it could even prevent some home deals from going through. But with the number of lenders and the amount of competition in the mortgage industry, a few simple phone calls to find the best company can save you thousands of dollars in some instances.