Closing costs are the final hurdle between a buyer and their new home. It can also represent a surprising chunk of money. So, it's no surprise there are a lot of questions.
Question 1: How Can I save money on closing costs?
Answer: Study the Loan Estimate Form and Ask Questions to your Lender
The Loan Estimate from your potential lender is the key to comparing closing costs from different lenders. It also makes it easy to evaluate costs once you've chosen a lender. The next step is to find where savings might be possible in ways that won't open you up for risk later.
At the bottom of the initial page of the Loan Estimate form, you'll find a summation of the closing costs. You can also see the total amount of cash required to close the deal. Make sure to ask questions about any fee - you are the customer. Fees like "underwriting" or "originating" are normal. However, fees such as "delivery fee" or "funding fee" may deserve an explanation. By understanding clearly what's involved in closing you can be sure there are no hidden or unexpected fees.
Some lenders even offer "No Closing Costs" mortgages. If you are tight on available cash, it's one strategy to fund your purchase but keep in mind you will still pay. The closing costs are simply incorporated into the loan. The lender pays the cash payments and you will pay more per-month on your mortgage payments.
Finally consider closing close to the end of month. To estimate savings, multiply your loan amount by your interest rate to find your annual interest charge. Dividing that by 365 gives the daily interest charge. Now, multiply that figure by the days left in the month to see the savings.
Question #2: Is it ok to shop around for services like Title and Settlement services?
Answer: Yes, it is a great idea to shop for partners you trust but it's urgent you do it early.
Title and settlement services can vary in cost but keep in mind this is one area to be careful about skimping. It's also very important to start shopping early. Researching and preparing documents take time so chose quickly. Your realtor and lender often have partners they have worked with in the past and trust. Review estimates but ALSO reviews. Make sure you are working with professionals. And don't be tempted to skimp and get the bare minimum. Your Lender may only require a Lender's Title policy but having an Owner's policy is a vital way of protecting your investment.
Make sure to work with realtors, lenders and title agents you trust so that when closing comes you know what you're paying and you're sure that you're protected.