One of the things that quickly becomes apparent during the mortgage loan closing process is how expensive buying a house can be. While there are a number of costs associated with mortgage loan closing, you may be able to negotiate your mortgage loan closing costs and save some money.
Shop Around for Mortgage Loans
First of all, prior to applying for a home loan, you can let prospective mortgage lenders know that you’re shopping around. Before you even go house hunting, you should find out which lenders are offering deals in terms of mortgage loan closing. While the closing costs should not be your only deciding factor, you must consider them when calculating the overall cost of a loan. [See related article “How to Shop for a Mortgage Loan”]
Always Ask Questions
Simply asking “why?” can actually lead to having some mortgage loan closing costs waived because it forces the lender to justify the fees. Be sure to get an explanation of the charges so you can compare offers and plan ahead for mortgage loan closing day.
Know What Is Non-Negotiable
It’s a good idea to find out what expenses are considered non-negotiable. Some mortgage loan closing costs (such as government loan funding fees, taxes, and recording fees) cannot be avoided. By understanding which items the lender is more flexible on, you can more effectively negotiate your position.
Look at the ’1100 Section’ of Your GFE
The mortgage loan closing costs listed in the Good Faith Estimate (GFE) are divided into different sections. The “1100 Section” contains a number of items which are considered negotiable (including title fees and attorney fees). Additionally, instead of going with the real estate agent/ appraiser/lawyer recommended by your lender, you may try shopping around for better-priced services. [See related articles “Should You Use a Real Estate Agent?” and “Do You Need a Real Estate Lawyer?”]
Negotiate With the Seller
In a buyer’s market, the seller might agree to pay some of the mortgage loan closing costs. Discuss your closing costs with the seller and see if they’re willing to share the charges. If the home has been on the market for a while and you’re a strong borrower (good credit, steady income, low debt), you will have more negotiating power. [See related article “What Kind of Borrower Are You?”]
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Keep in mind that you don’t always have to pay everything the mortgage lender tries to charge ― and with mortgage loan closing costs, there’s often room for negotiation. Do the proper research and look into the typical lending practices for your area. Also visit several different lenders and inquire about their policies for closing costs. After all, you won’t be able to save any money on your mortgage loan if you don’t at least ask.