A large part of the cost of buying a home is the amount of funds it will take to close the sale. Since closing costs on a loan can total 3-6% of your loan amount, it would be beneficial to discuss the costs with your lender.
When you apply for a mortgage, the lender will provide a loan estimate outlining what your approximate closing costs will be. The loan fees will include everything from the loan origination fee, homeowner’s insurance, your down payment, appraisal, and title fees.
You can lower your down payment to reduce your closing costs, but keep in mind that a lower down payment can result in having to pay mortgage insurance. Paying a higher interest rate may allow the lender to rebate some of your closing fees. The trade-off is that it will cost you more over the life of your loan.
If you choose to negotiate to pay fewer discount points for your loan, your closing costs could be less. Your interest rate will be higher as a result. You can’t make closing costs go away, but having an open conversation with your lender may help you in understanding the cost to buy a home. Additionally, some sellers may adjust the sale price of their home to you in exchange for paying some of your closing costs.
Call or email me, and we can go over these possibilities in more detail and help reduce your closing costs.