You Can Reduce Your Closing Costs, But Should You?
All of the costs incurred in the course of purchasing or refinancing a home are called “closing costs.” They include fees that you pay the lender, most importantly the origination fees, but other fees as well, such as appraisal, title, and recording fees.
Closing costs are usually paid from the borrower’s funds, but often you can lower them with seller credits. As well, your lender may agree to waive some of your closing costs. Sellers are often willing to cover some of your closing costs in exchange for a slightly higher purchase price, and lenders may be willing to collect less closing costs at the closing by charging a slightly higher interest rate.
Seller credits and trade-offs
These may sound great, but note that a higher home price or a higher interest rate will cost you more in the long run. When you begin the prequalification process, consider these “benefits” but ensure you know the downsides.
Your real estate agent can help you decide the true worth of a sellers’ credit, while your lender can explain all the mortgage options available to you, including trading a higher rate for reduced closing costs. The decision, however, is yours.
Your down payment is also required at closing, and the amount of these funds (Down payment is not considered a cost) absolutely can’t be reduced by seller or lender trade-offs. Fortunately, you can use monetary gifts from close relatives to partially or completely reduce the down payment amount that comes out of your own funds, and you may also able to use approved government or other nonprofit down payment assistance programs.
The qualified professionals at MiLEND are more than happy to offer free advice on how to avoid unnecessary costs. For over two decades, MiLEND has helped thousands of home buyers make their American dream come true. Their helpful, licensed loan experts will take the personal approach to getting you approved for a home loan, refinance, reverse mortgage, or any one of their other helpful loan products or services. Contact MiLEND today