Closing Costs: How To Reduce Them
Buying a home is an exciting time. It’s a time to purchase your first home, or maybe you want to move up into a larger home. Whatever the case may be, there are a few things you should consider before buying that home. If you don’t do these things, you may find yourself in serious trouble should you ever need to make a quick property sale (or an REO). I will give you a list of things you should research and think through prior to buying your first home.
Many people do not factor in closing costs when purchasing real estate. Some buyers believe they can just pick a price for their new home and walk away from it. However, if you buy a home without paying close attention to closing costs, you may be out hundreds or thousands of dollars before you close the deal. Putting at least 20% down will greatly increase your chances of obtaining a mortgage at a good interest rate, and would help you avoid high mortgage insurance.
Homebuyers who are looking to save money on their mortgage payments often overlook the importance of home inspections
I think most buyers realize that the cost of insurance and taxes add up very quickly. What many buyers don’t know is that there are several reasons why buyers should always have home inspections. By having these inspections done prior to purchasing, you are reducing the risk of major problems down the road.
When you have your home inspections done, the inspector will check for problems and give you a report of what is found. You may discover things that you were not aware of. This makes you responsible to own up to the problems found. You can choose to dispute what was found with your home inspector or let the inspector give you a written description of everything that was found. Either way, you will be fully aware of what was found and what you are responsible for moving forward.
Another reason why buyers should consider having home inspections done is to save money on closing costs. Home Inspectors who receives a payment from a buyer is paid on a retainer basis, not a per job arrangement. This means that they are only paid when they find a problem, not based on how long it takes them to complete the inspection or even how much they cost the buyer. For these reasons, having your home inspected prior to applying for your mortgage will save you thousands of dollars in your closing costs.
Homeowners often underestimate the effect that lender fees will have on their mortgage closing costs
Closing costs are dependent upon many factors, including the number of bedrooms in the home and how much the house is appraised at. Many homeowners fail to calculate these factors into their budget, which leads them to overspend on their mortgage. Applying to your lender early can help you avoid this problem and get an idea of what your monthly closing costs will be. In addition, some lenders waive closing costs if borrowers can prove that the cost of their services would be “unnecessary“.
Many home buyers are unaware that there are certain things that their lender requires them to do before they close on the home. First, sellers must provide inventory information that clearly states what was removed and what needs to be replaced. Next, lenders must determine if borrowers still qualify for any mortgage insurance, such as down payment assistance. This mortgage insurance protects lenders against the possibility of losing money on the deal because of unfavorable sales trends.
It is important to remember that lending isn’t the only place you can look for financing
You may also want to consider shopping around for interest rates, home loans, and home equity loans from other lenders. If you use the Internet, you’ll be able to quickly compare lender fees and see which ones will save you the most money in your closing costs. With so many options available to you, it’s easy to find the perfect lender to meet your financial needs. As long as you are diligent with your due diligence and research, you’ll be able to find a lender who will work with you to create a great outcome.