Closing and the inevitable closing costs, as you’re surely aware, are the final hurdles to cross before finishing the purchase and walking away with the keys to your new house. And, because buying a property is usually a long and tedious process, many buyers are tempted to simply pay the closing expenses and be done with it. Closing costs, on the other hand, can account for up to 5% of a home’s purchase price, which is a significant sum of money. It pays to do everything you can to keep those closing fees as low as possible. So, let’s look at 6 strategies to save money on closing expenses when buying a home in Seattle.
1. Comparison Shop by Comparing Lenders’ Loan Estimate Forms
The first place you’ll find your closing costs itemized is in the official document called the “Loan Estimate” form. This is probably the best place to begin when trying to lower your closing costs.
“The three-page ‘Loan Estimate form’ that your lender must prepare within three business days after you apply for a mortgage is where your closing costs are initially itemised. Although it is not needed, some lenders will provide you a Loan Estimate form even before you apply for a loan, which is a little-known truth. (Note: Three days before closing, you’ll receive a final ‘bill,’ known as a ‘Closing Disclosure’ form.)”
You should get a Loan Estimate form as soon as possible because it will allow you to “comparison shop between companies’ total costs and also dig into specific fees once you’ve chosen a lender.” That way you can find the company offering the lowest closing costs. Just make sure you get the actual Loan Estimate form, not the “closing costs worksheet” or a “fee itemization.”
2. Take a Careful Look at Where the Savings Are
In addition to allowing you to comparison shop, the Loan Estimate form may also assist you in determining where you can save money in order to reduce your closing costs when purchasing a home in Seattle. And here’s what you should be aware of…
“The bottom of the first page of the Loan Estimate form shows the total closing costs and cash needed to close the loan. The heart of your savings is Section C, page 2: ‘Services You Can Shop For.’ These fees include”:
- Title search
- Title insurance binder
- Lender’s title policy
- Settlement agent
The priciest of these services is where you can save the most. Typically, these are the title insurance and the settlement services.
3. Negotiate the Mortgage Lender Fees
The mortgage lender fees are another area where you can save money on your closing costs. Lenders are frequently eager to work with you, and you may be able to negotiate certain prices. Lenders want your business, so they may be willing to work with you on fees.
Industry pros recommend that you “take a close look at all the fees and see if the lender is willing to reduce the costs or drop any of them. There’s a lot of competition these days among mortgage lenders, so it never hurts to ask.”
4. Get the Seller to Pay Some of the Closing Costs
You can also try to get the seller to pay some (and sometimes all) of the closing costs, which will lower your closing costs substantially.
“[S]ellers might occasionally grant a closing cost credit, which means the seller gives you money back at closing to offset part of your upfront expenditures,” says one expert. When you make an offer, you’ll need to discuss this with the seller as part of your purchase agreement. Keep in mind that “[t]he seller may not be willing to do this in a competitive market if they have multiple interested buyers, [and lenders] typically have restrictions on how much a seller’s credit can be,” and that “[t]he seller may not be willing to do this in a competitive market if they have multiple interested buyers.”
To deploy this strategy effectively to lower closing costs, you’ll need to lean on your agent’s negotiating expertise. To discover more about this, just call [phone].
5. Time the Closing Correctly
When buying a home in Seattle, strategically scheduling your closing might be an effective technique for lowering your closing costs. “[c]losing charges often include prepaid daily interest to cover the interest costs that will be charged on the loan between the time you close on the home and the time the first payment is due,” according to the website.
So if you time the closing to occur at or near the end of the month, “you can minimize the amount of prepaid interest you owe, which would reduce the fees you’ll owe.” And the upshot is that it will lower your total closing costs.
6. Buy Less Home
As a last resort, you can lower your closing costs substantially by simply buying less home. The smaller the purchase price, the less you’ll pay in closing costs.
Many costs, such as “[t]itle insurance premiums, appraisal and survey prices, transfer taxes, and a host of other fees,” will be reduced as a result of the lower price tag. Furthermore, if you buy a less costly property, you won’t have to put as much money down, leaving you with more money to cover closing fees.
And Work Closely With Your Seattle Agent
Finally, if you truly want to save money on closing fees, make sure you work with a knowledgeable local agent. Your Seattle agent will be well-versed in the ins and outs of the local market, as well as all of the cost-cutting strategies. So, if you’re looking to save money on closing expenses while buying a home in Seattle, give us a call at (813) 993-0520.