Five Ways to Reduce Your Real Estate Closing Costs

closing costsBuying a home can be a costly enterprise, so when it comes time to close, closing costs seem like a dark cloud over your new home. If you feel it’s unfair for you to bear the full burden of closing costs, then check out these tips for how to offset this expense.

Shop for Quotes That Include Closing Costs

You probably didn’t buy the first house you looked at, so why would you only talk to one bank? Do your homework beforehand, then hear quotes from three to four lenders. It should be relatively easy to get a quote; you might even be able to do it over the phone. Don’t forget to ask for a quote that includes the closing costs.

Negotiate with Your Realtor

The buyer’s agent will usually get a commission of 1% to 3%, but this is often open for negotiation, especially when the market is down. Remember, real estate agents work hard. So, if you’re going to ask your realtor to reduce their commission be ready to negotiate the workload. If you’re willing to do more work, then you may be able to save here.

Consider Your Loan

Many homeowners don’t know that if closing costs are looking steep, you can factor them into your loan. If you want to keep some cash flow free for decorating, upgrades, or repairs, ask your bank about a lender’s credit.

Pay at the End of the Month

Closing your loan at the beginning of the month will mean that you’ll have to pay daily interest rates for the whole month, whereas if you’re able to close at the end of the month, you’ll only have to pay for a few days. This unexpected method could potentially save you hundreds of dollars. You may, however, run into difficulties if your seller wants to close on a particular day.

Go It Alone

If you want to eliminate the expense of a real estate agent, you can do it alone. Plenty of people buy or sell a house without an intermediary, although it takes a lot more work. If you are planning on buying real estate as an investment, it might even be worth it to invest the time in getting your Realtor’s license.

As a homeowner, you’re about to take on a lot of expenses. Don’t be afraid to look anywhere to cut costs, even if the amount seems insignificant at the time. ♦