Buying a House Series #10 – Knowing Where and How to Negotiate On Your Closing Costs

So you fixed your credit score, saved enough for a down payment, know what you can afford, selected a real estate agent, and found a home you like, made an offer that the seller accepted, had the house appraised, and secured a loan. Now it’s time for to negotiate closing costs! Closing costs are a wide variety of costs, fees, and taxes that add to to an average of $2,500 or more on most $200,000 loans. This “Buying a House Series” is made with years of experience on the best way to get your ducks in a row so you can get a loan and find the home you want at the price you want. Use the following the tips below to make the process much smoother on you…

Inspection and Appraisal Fees

The lender selects the appraiser so you won’t be able to lower any appraisal fees. You will have more luck negotiating the home inspector fees but the full fee is usually only $300-$500 so there won’t be a ton of savings here.

Lender Fees

Different lenders have different fees. Some lenders basically fee you to the poor house.  For example… some lenders charge for applications, credit checks, and processing. Some lenders even have a miscellaneous fee! What’s that for! Also make sure to compare the closing disclosure statement with the estimate you received at the beginning of your process with the lender. Look for unexpected fees that may make it on to your bill.

Discount Points

If you decided to pay for discount points at closing to lower your interest rate they are due at closing.

Home Insurance

You will need home insurance but you CAN shop around. Knowing that the average premium in 2014 was $1,034 will help you decide on a home insurance provider.

Title insurance

Title insurance is a mandate in some states and it protects your ownership of the property. The insurance can fight of fraudulent claims, courthouse errors, liens, and family disputes. Again, shop around. It’s a one time cost ands averages $3.50 per $1,000 of purchase price. Sometimes a seller will pay for title insurance but it’s not common at all.

Seller’s Costs

You can ask the seller to cover some or all of the fees in a conventional loan but it will be tough to get them to in a sellers market. Buyers who are short on cash could offer a higher buying offer in exchange for the seller covering some closing costs. FHA loans allow sellers to contribute up to 6% toward closing costs; VA loans allow 4%, and conventional loans permit 3% to 6%.

The Time of the Month That You Close Matters

Closing costs will include an interest that accumulates before the end of the current month so it’s less out of your pocket if you close late in the month than early in the month.

Once you’re through negotiating the closing costs, you’ll be on your way to the final walkthrough…

Buying a House Series Posts

Tom Reese has 20+ years experience in helping his clients buy the homes they want at a price they can afford. Tom has helped his clients buy and sell property in every neighborhood in Northern Kentucky and Cincinnati.

About Tom Reese

Helping my clients attain their dreams has been the foundation of my success. With my strong attention to customer service, I have earned my clients continued support and referrals. Put my enthusiasm and dedication to work for you!

Call Tom anytime at (859) 393-1293