How Can a Homebuyer Lower Closing Costs?

For a first time homebuyer, the list of closing costs can be very intimidating and confusing, but remember that most of these can be negotiated. Working with a real estate expert would be ideal, so that you can be given the appropriate information, guidance, and assistance all throughout the process. Some of the things that your real estate partner would suggest would be the following:

1. Do Some of the Legwork in Exchange for a Rebate on the Broker’s Commission

Choose a brokerage firm that would agree to let you do some of the legwork yourself and, in return, give you a rebate on their commission. Aside from negotiating to lower your broker’s commission, you can also ask them to give you a percentage of their broker’s commission when you do certain tasks without the help of the broker, such as checking property listings and going to open houses.

2. Take the Time to Learn More About the Fees and Charges in Your Closing Costs List

One of the biggest mistakes homebuyers make is accept the closing costs that are presented to them without bargaining to reduce them or take the vague ones out. Some of them simply don’t want to spend time to learn what each of the costs are because the list seems too complicated. However, being familiar with these costs allows buyers to negotiate and get the best deal from this real estate transaction.

3. Shop Around and Get Quotes from at Least Two Lenders

According to a recent study, a homebuyer can save as much as $1,500 by getting one additional quote and at least $3,000 by requesting quotes from five lenders. Apparently, lenders offer different rates and, when they become aware that you are considering other lenders, they can get pretty competitive. By shopping around for lenders, you are not only able to compare different rates and choose the lowest ones, you also drive these lenders to offer more competitive rates.



Month 4. Schedule Your Closing Date to the Latter Part of theMonth

Some of the closing costs, such as prepaid daily insurance charges, can be reduced with the right timing. By this we mean that when you set your closing date towards the end of the month, the number of

days remaining in that month would be less and this would result to lower charges. This is because your cash outlay for prepaid or “per diem” interest is computed based on the number of days from your loan closing up to the beginning of the succeeding month.