Securing a home loan is not an easy task. When it comes to a long list of fees related to the mortgage, the task becomes for daunting and confusing. It is difficult to determine the closing cost and the other fees to check whether you are overcharged or not. Here are a few ways to save on the home mortgage’s closing costs.
When you shop around for mortgage, the interest rate is not the only thing to keep into consideration. When it comes to mortgage shopping, one needs to get quotes from a lot of lenders. This would help to choose the best lender. The closing cost is an important factor beside the interest rate and also the penalties.
Location has a considerable effect on the closing cost. According to the Federal Reserve, the closing cost is approximately equal to 3% of the total home value. In the locations with high taxes, the closing cost would be 6% of the value of the home. The closing cost value depends upon the state, you reside in.
Some lenders provide the option of paying more points at the time of closing for a lower interest rate. Though it might look tempting, this option would not be very helpful, if the interest rate is already low. Paying points upfront when the rates are already lower would be unnecessary. However, in some cases, paying points would be more valid. If you are planning to remain in the house for very long, then paying points would help.
The homeowner’s insurance would help to reduce the closing cost and also helps to save the money on the insurance premium. There are a lot of insurance providers who provide such insurance. It is important to make sure to choose the right insurance to avoid costly force placed insurance.
Remember that there are a lot of lenders, out there. If your credit score is above average, then your options are wide open. If a lender refuses to discuss about the closing cost or is providing a big figure as closing cost, then you can negotiate. Any fee that is imposed by the lender, like, the processing fee, warehousing fee and others can be negotiable.
Check for additional fee
Check the estimate and note down the different fees and the request for explanation. If the fee is novel and significant, try negotiating or switch to the next best lender available for your credit score.