Tips to Save Money on Closing Costs
Closing costs include a variety of fees and expenses that may cost buyers thousands of dollars.
Many home buyers take the proper steps when obtaining mortgage financing, such as cleaning up their credit, saving money for a down payment and comparing top lenders. However, a common misstep that some people make is failing to account for closing costs in their budget. The good news is that buyers have some control in how much they pay in these fees, and adopting a few strategies can help them avoid a financial shock when they’re finalizing the home sale.
Certain costs, ranging from processing fees, settlement costs, underwriting fees and application expenses, are typically considered “junk” fees and may be reduced. Fees that go to a third party, such as title search, appraisal, attorney’s fees, credit report and title insurance, are generally firm.
2. Choose the Right Lender
Most lenders are upfront about the services they provide and the estimated costs of each, however some may not be as clear about their closing costs. Buyers should specifically request an estimate for these expenditures as well, because it may help them narrow down their choice of mortgage servicer. In general, total settlement costs should range from three to five percent of the total price of the home. Individuals who are trying to keep costs low should avoid lenders that charge above this benchmark.
3. Shop Around for Homeowners Insurance
Pricier homeowners insurance may lead to higher closing costs, so comparing providers is a helpful way to avoid this scenario. In addition to lowering final expenses, buyers who are trying to stick to a budget will enjoy lower insurance premiums over the course of their loan.
Lastly, it’s not uncommon for last-minute errors to appear in final documents so it’s important to review all final costs and documents before signing anything. Once the mortgage agreement is signed, it may be difficult to make any changes.
Want to Learn More?
Visit the Zions Bank Home Loan Center for more information or to get started on your mortgage application.