You have scrimped and saved for years and now you have money in the bank for a down payment on a property. But before you rush into the market, consider this. What many homebuyers don’t take into account are the extra expenses that lurking in the closing costs. Closing costs can equal 3 percent of your purchase price in many cases, and sometimes even more depending on the price range. There are many costs that can fluctuate daily, from government charges like transfer stamps to attorney or title company fees. Closing costs cannot be avoided and everyone will have their hand out at the closing table waiting for their check. On the up side, many closing costs are negotiable, so do your homework!
If you belong to a union give them a call! Many union members can receive discounted rates on closing costs or a discounted interest rate. If you are a U.S. military veteran, the federal government has financing programs just for you. You just have to look beyond your typical VA loan program. Many of them have no closing costs and no-down-payment policies. Everything will get rolled into the loan you receive from them. You should also approach the banks in which you have savings accounts or have done business with previously. Many lenders may reduce your loan origination fees since you are a valued customer of the bank.
Many buyers will ask the sellers to pay their closing costs on their behalf. Your realtor can negotiate this while working on the other details of your offer. Please keep in mind though, many lenders will cap the amount a seller can give back to a buyer for closing costs. Consult your realtor or attorney prior to negotiating this credit.
Try to close the transaction as close to the end of the month as you can get. Many closing costs are prorated on a per diem basis; this can include up-front interest on your loan. Closing on the 25th of the month will only require you to pay for 5 or 6 days of per diem compared to closing on the 3rd of the month and having to pay for the entire month up front.
Always consult with your realtor or attorney before entering into any transaction. Both will be able to estimate your closing costs based upon your price range and desired area. If your transaction includes a mortgage, all lenders are required by law to provide you with an estimate for your review prior to closing.
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