Homebuyer Tips: How to Reduce Closing Costs in Rochester Hills, Michigan

The list of closing costs can be quite overwhelming, especially for a first time homebuyer. However, all these fees and charges are not set in stone and the buyer may negotiate for some of the costs to be reduced, shouldered by the seller, or be taken off the list.

1. Research on First-Time Homebuyer Programs

Virtually all banks have some form of first-time homebuyer program, so do some research and see which one would be most beneficial and applicable to you. You may qualify to receive some sort of subsidy on your down payment or get a mortgage through a relaxed credit score. In some cases, a first-time homebuyer may be offered a mortgage with down payments for 3% or 3.5% of the purchase price.

2. Request for a Rebate on the Broker’s Commission

In addition to negotiating for a lower broker’s fee, you can further reduce your closing costs by working with a brokerage firm that offers a rebate on its commission in exchange for doing some of the legwork yourself. For instance, you can check property listings and go to open houses without your broker and they would reward you by giving you a percentage of the commission that is paid to the broker at closing.

3. Familiarize Yourself with the Fees and Charges in Your List of Closing Costs

It is best for you to learn about each and every item on your closing costs list because this knowledge would enable you to negotiate for the best deal out of your home purchase. You can do this by researching online, but it is ideal that you work closely with a real estate expert so that you are armed with all the right information. By knowing everything you need to know about your closing costs, you will be able to negotiate for lower fees and even take out some of the fees that seem vague or unnecessary.

4. Shop Around for Rates from Several Different Lenders

What most homebuyers don’t usually do – shop around for lenders. And as a result, they are not able to compare quotes and get the best rates. The fact is, different lenders use different terms for closing costs and they also offer different rates. So, if you want to get the best rate, don’t just ask a quote from one lender. Instead, ask a quote from two or more lenders, and you may be able to save at least $1,500. According to a study, a homebuyer can save as much as $1,500 by getting one more quote and at least $3,000 by getting quotes from five different lenders.

5. Set Your Closing Date Towards the End of the Month

Certain costs, such as prepaid daily insurance charges, are pro-rated and can be reduced with the right timing. If you schedule your closing date towards the end of the month, the per diem interest will be lower because the number of days from the closing date to the start of the next month is less. If you want to calculate your savings, simply multiply your loan amount by your interest rate then divide the result by 365 to get your daily interest charge. Next, multiply that figure by the days left in the month and the result will be the amount you’ll have to pay at closing.

Although closing costs are not set in stone and may be negotiated with all parties involved in your real estate transaction, all the information can be very confusing to homebuyers and having a real estate expert by your side can greatly help. If you are planning to purchase a home in Rochester Hills, Michigan I would be more than happy to assist you every step of the way. Feel free to give me a call at 919-452-6484 or send me an email at [email protected] and I will get back to you the soonest possible time.