Avoid Paying Unnecessary Fees by Lowering Your Closing Costs: Here's How

Finding that dream home is by no means an easy feat. Some homeowners look at nearly a dozen homes before they find "the one" they want to make theirs. Now that you've found the one, the difficult part is behind you. There's still more entailed in the home-buying process, though.

The next step is to close on the house, and this usually entails you coming up with between 2% and 5% of the loan's value. For someone purchasing an expensive home, this could be a considerable chunk of change. However, borrowers can often lower their closing costs by using the right negotiation tactics. Here are some tips to help. 

Ask the Seller to Pay 

You can choose seller concession, which is when the seller agrees to pay for some of the closing costs. You and the seller can agree on a designated amount or percentage the seller will cover. Often, this may require some bartering. You may need to offer a quick closing and avoid asking the seller to fix any issues with the property for them to agree. 

Reduce the Price of the Home as Much as Possible

As mentioned above, your closing costs are a percentage of the home's value. You can reduce this cost by negotiating the price for the home. This is when it's best to work with your buyer's agent — your partner in the home-buying process. Your agent can help you determine a fair price for a home in that area and find specifics about the house that you can negotiate with, such as an older roof. 

You may want to wait for a buyer's market, where buyers have the upper hand and sellers may take less than their initial asking prices. 

Shop for Homeowners Insurance 

Homeowner's insurance isn't a closing cost, but you need to have it before you can close on your house. It's a requirement from the mortgage company before processing your loan. Your lender wants to make sure they'll still get the money if something should happen to your home. 

As a general rule, shop around and get several quotes before you pick a home insurance policy. Compare the policies based on their price and company reputation. 

Compare Lender's Carefully 

While you always want to get a low interest rate on your mortgage, this isn't the only aspect of buying a home you need to think about. Lenders charge different closing costs. When you compare, take a look at not only how much you can expect your monthly payment to be with interest, but also check the closing costs. 

Postpone Your Closing 

You can minimize your prepaid daily insurance charges by closing at the end of the month. This takes careful planning to ensure you postpone that long and reduces those fees. You don't have to pay an exorbitant amount for closing costs. When you negotiate and shop around, you can save yourself money and prevent any delays during the closing process. 

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