Whenever you take out a mortgage whether it’s purchasing or refinancing you have to pay closing costs. Whether you pay these fees out of pocket is another question, but either way, there will be a cost, and you must pay it one way or another.
There are two main types of closing costs including recurring closing costs and nonrecurring closing costs. There are quite a few costs associated with obtaining a mortgage and not everyone has the cash on hand to pay for all these fees.
If you want to reduce your closing cost they are several strategies to do so. Here are just a few:
- Use seller contributions to cover closing costs. If it’s a home purchase you can ask the seller to chip in money towards the closing cost. Either in exchange for a higher purchase price or just be a negotiation. Or receive a credit as a result of repairs found during the inspection.
- Get a lender credit to offset closing costs. In exchange for a higher mortgage rate. You can get a credit from the lender to cover closing costs so they don’t need to be paid out of pocket. But instead, a higher monthly mortgage payment.
- Ask for credit from your real estate agent. It’s perfectly acceptable to ask for a credit from your agent, they can decline your request.
- Negotiate and shop your closing costs. Like mortgage rates, you can negotiate your closing costs which are considerably from lender to lender. You may also be able to shop for certain third-party costs.
- Closing at the end of the month is one way to cut down on closing costs. Because you can reduce per diem interest but your first mortgage payment may be due sooner. If refinancing you might be able to roll closing costs into the loan.
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