5 Ways to Save Money During Your Closing
As a homebuyer it is important to factor in closing costs into your overall budget because closing costs can add additional fees up to 3% to 6% of the price of your home!
Closing costs can vary widely by lender and on the amount of debt-to-income ratio you have as a homebuyer. Therefore, this article will provide a generic overview on how you can save on your closing costs, however, keep in mind that each individual situation is unique. Let’s look at 5 ways to save money during your closing:
# 1 Pay Attention to Your Loan Estimate
When you’re applying for a loan to buy property, your lender will provide you with a Loan Estimate which details your loan terms and projected payment schedule. This document also gives you a good faith estimate on expected closing costs. While the amounts listed will be approximate, a Loan Estimate is still a helpful way to get an idea of how much your closing costs will be. If you are not comfortable with the amounts detailed in the Loan Estimate, you may want to consider other loan options or lenders.
# 2 See Services You Can Shop For
On your Loan Estimate, your lender will display costs into two categories: services that you can shop for and services that you cannot shop for.
There will be prices listed out next to the services that you can shop for and you are free to choose the vendors for title search (your title company), pest inspection, survey and other various services. You are not required to use your lender’s preferred vendors and you can ask for estimates from other companies that perform the same services. Shopping for your own services can save you hundreds. Do a little research about the vendors in your area and see if you can find a more affordable option.
#3 The Closing Agent Matters
When signing a purchase agreement negotiate with the seller about choosing the closing agent (Title Company or Attorney). There are various reasons why you would want to be in control of who the closing agent is, some of which include: number 1 you want to ensure your transaction is being closed by a professional and credible company and number 2 is you can negotiate their fees in advance ensuring that you will be able to save extra money on closing costs. Choosing your closing agent is also important because you can assure you pick a title company or attorney who is responsive. You will have many questions before closing so it is important to work with professionals who are fast and efficient and communicate with you throughout the entire process.
#4 Shop Around for Homeowner’s Insurance
Once again, we will emphasize that you don’t need to use preferred vendors from your lender or realtor. Shop around and get quotes from various companies and you may see a big amount in savings! Insurance companies are more than willing to provide you with extra discounts if your property has some sort of security features such as alarms, cameras or even a hurricane proof garage door. Also keep in mind that if you are buying a property within an HOA community, a lot of times the HOA carries their own insurance for exterior features such as roof or windows, so make sure your insurance company accounts for these details and provides you with the appropriate coverage.
#5 Close Later in the Month
At the time of closing you’ll have to prepay interest from the date of closing through the end of the month. So one easy way to save money on your closing costs is to try and close at the end of the month. The number of days left in the month after closing determines the per diem interest you pay. If you close later in the month, there are fewer days for interest accrual, therefore a smaller fee wrapped into your closing costs.
As with everything in life, the more information you have the better prepared you will be at it. Closing on your home is the same way, the more informed you will be, the more you will be able to save! We hope this article was informative for you and wish you good luck during your homebuying process.
Now that you know some ways to save during your closing, we are here to help with any questions you may have.
Feel free to contact us: firstname.lastname@example.org – (561) 288 1653
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