How to Lower Closing Costs. Unsuspecting buyers can be taken for thousands of dollars if they don't understand what fees they should be charged on their home loans. This article shows you what you can do to lower the closing costs you pay when you buy or refinance your home.
There are several things that you can do to lower your closing costs: one of the first is to insist that your loan provider give you a copy of the final HUD statement 24 hours before the closing. This allows you to compare the estimated closing costs with the final fees before you have to sign the papers. Have your real estate agent review and explain the fees to you as well.
Make certain that third-party fees such as appraisal and survey fees, as well as administrative fees are not excessive. These charges should be very similar within a given geographic region and lenders are prohibited from charging markups on these fees by law. It will probably be easier to simply add up the total fees and negotiate for a lower amount rather than trying to break them down individually.
Compare the costs of title insurance prior to getting your loan. This way you can use the cheapest insurer that you find, instead of the one that your lender will assign to you. This can reduce your aggregate cost by hundreds of dollars. When you get a quote on title insurance, ask the agent if you're eligible for a discount of any kind, such as for bundled services, bulk rates if your home is in a new subdivision or senior citizen or first-time home buyers.
Finally, and perhaps most obviously, shop around for a loan with several different lenders to see who will offer you the cheapest closing costs. Don't be afraid to walk away from a deal at the closing table if you don't like the numbers you see. And beware of "no fee" loans that charge higher rates in lieu of closing costs. These programs are usually ripoffs and should be avoided, unless you have another loan program with actual closing fees to compare it to that is more expensive.