4 Mistakes Which Increase A Home Buyers Mortgage Closing Costs
Buying a house is an expensive proposition for most homeowners, particularly if you are purchasing your first home. Not only do you have to put forward money for a down payment which is traditionally 20% of the purchase price, but you also have to pay mortgage costs which can be up to 5% of the purchase price of the home. While you can quickly and easily understand what your home price will be, it is difficult to understand fully what your closing costs are and will only learn the exact amounts of them at the last second, when you are closing on your house. This article will provide you with four mistakes that home buyers typically make when buying a home that lead to closing costs that are too high.
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1) Not Researching the Customary Closing Costs: Closing costs can be complicated to understand and have several different components present that can lead to some complication for a borrower. Included are fixed fees and taxes, as well as variable amounts that depend on the amount that you are borrowing. Understand the typical terms of these closing costs in order to be able to reduce them to the lowest amount possible.
2) Not Shopping Around To Different Lenders: Different lenders may charge different closing costs so look around and try to find a reputable lender that offers the lowest closing costs on your mortgage loans. Provide estimates from one lender to another to see if they will meet or lower their charges below this threshold which can reduce your closing costs.
3) Not Negotiating Your Closing Costs: Once borrowers receive their good faith estimate they often stop negotiating their closing costs. Look for closing costs that are not mandated by law or set in price and considers negotiating them to reduce your overall closing costs on your loan.
4) Borrowing the Maximum Offered: Many people will turn around and borrow the maximum that their lender allows them to without thinking about the impact that this will have on their closing costs. As some closing costs are calculated as a percentage of the mortgage loan this will lead to higher closing costs than you might otherwise think. If you have the extra cash lying around consider reducing your mortgage amount as it can significantly lower your closing costs by a related amount.
Closing costs are expensive but can be lowered by considering the aforementioned four ways to lower your overall closing costs.
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Posted in Financial Services Post Date 01/24/2021