{"id":111685,"date":"2021-09-08T14:30:00","date_gmt":"2021-09-08T20:30:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=111685"},"modified":"2024-01-15T13:58:24","modified_gmt":"2024-01-15T20:58:24","slug":"lower-closing-costs","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/lower-closing-costs","title":{"rendered":"Avoid Paying Unnecessary Fees by Lowering Your Closing Costs\u2014Here&#8217;s How"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC1254024406&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p>The hardest part\u2019s over because you&#8217;ve found the perfect house. Now you have to go through negotiations to buy the house and determine your closing costs.<\/p>\n\n\n\n<p>Closing costs are expenses in the home-buying process that typically equal 2% to 5% of your loan\u2019s value, which can make them very pricy if you\u2019re buying an expensive property.<\/p>\n\n\n\n<p>Borrowers might be able to reduce closing costs with the right negotiation tactics. Wondering how to lower closing costs? Here are several tips to try before you sign off on your purchase.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are closing costs?<\/h2>\n\n\n\n<p>Closing costs are fees that occur when finalizing a real estate transaction on the sale or purchase of a house. Once the property is transferred into your name, these fees are due. Both homebuyers and sellers pay closing costs, but it varies <a href=\"https:\/\/www.biggerpockets.com\/blog\/who-pays-closing-costs\" target=\"_blank\" rel=\"noreferrer noopener\">who pays closing costs<\/a> and how much they pay.<\/p>\n\n\n\n<p>A home loan amount, a property\u2019s location, and a home buyer\u2019s credit score are some of the factors determining closing costs. Some state laws also require professional services that increase a transaction\u2019s closing costs.<\/p>\n\n\n\n<p>Many closing costs are negotiable among homebuyers, sellers, and mortgage lenders. If you\u2019re buying a property, it\u2019s crucial to research and shop around for home loans before choosing a lender.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n  <div id=\"posts_lists-block_61084f7850128\" class=\"  my-10\">\n    <div class=\"\">\n      <!-- Column One -->\n      <div>\n                  <h2 class=\"mt-0 mb-1 js-toc-ignore\">\n            More on home buying from BiggerPockets          <\/h2>  \n                  \n        \n        \n        <div class=\"grid grid-cols-1 gap-y-4 lg:gap-y-7 mt-5\">\n          \n<article \n\tid=\"post-136938\" \n\tclass=\"content-card mb-0 flex flex-col  post-136938 post type-post status-publish format-standard has-post-thumbnail hentry category-biggerpockets-daily category-buying-selling tag-buying-selling tag-buying-selling-houses tag-closing-process tag-real-estate-comm\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/closing-disclosure\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"332\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/closing-disclosure-1-560x380.png\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"What Is a Closing Disclosure? Here&#8217;s What Home Buyers Should Know\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/biggerpockets-daily\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">BiggerPockets Daily<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">7 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/bp-wp-migration.s3.amazonaws.com\/author_avatars\/1687.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2021-04-02T09:30:33-06:00\">Apr 02, 2021<\/time><time class=\"updated\" datetime=\"2023-03-29T10:05:39-06:00\">Mar 29, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/mindyjensen\" class=\"no-underline line-clamp-1\" target=\"_blank\">Mindy Jensen<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/closing-disclosure\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tWhat Is a Closing Disclosure? Here&#8217;s What Home Buyers Should Know\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">You found a house; you went under contract; and you survived the home inspection, appraisal, and loan underwriting. Congratulations, the end is in sight! You\u2019re well on your way to&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"136938\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-136938 -->\n<article \n\tid=\"post-126861\" \n\tclass=\"content-card mb-0 flex flex-col  post-126861 post type-post status-publish format-standard has-post-thumbnail hentry category-acquiring-property category-biggerpockets-daily category-real-estate-investing-for-beginners\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/down-payment\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/down-payment-340x225.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"How Much Is a Down Payment on a House?\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/buying-selling\/acquiring-property\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Acquiring Property<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">10 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/09\/cropped-sarah-bloomfield-150x150.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2023-02-14T23:18:16-07:00\">Feb 14, 2023<\/time><time class=\"updated\" datetime=\"2025-12-02T12:29:04-07:00\">Dec 02, 2025<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/sarah-bloomfield\" class=\"no-underline line-clamp-1\" target=\"_blank\">Sarah Bloomfield<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/down-payment\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tHow Much Is a Down Payment on a House?\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Your down payment amount will influence how large of a mortgage you&#8217;ll need and what the monthly payments will be.<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"126861\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-126861 -->\n<article \n\tid=\"post-78736\" \n\tclass=\"content-card mb-0 flex flex-col  post-78736 post type-post status-publish format-standard has-post-thumbnail hentry category-biggerpockets-daily category-buying-selling tag-basics tag-buying-selling tag-buying-selling-houses tag-real-estate-comm\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/home-buying-mistakes\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"332\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/07\/Home-buying-mistakes-560x380.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"7 Home Buying Mistakes to Avoid While House-Shopping\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/biggerpockets-daily\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">BiggerPockets Daily<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">9 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/bp-wp-migration.s3.amazonaws.com\/author_avatars\/1676.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2021-05-25T09:30:00-06:00\">May 25, 2021<\/time><time class=\"updated\" datetime=\"2023-05-11T10:42:11-06:00\">May 11, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/scotttrench\" class=\"no-underline line-clamp-1\" target=\"_blank\">Scott Trench<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/home-buying-mistakes\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\t7 Home Buying Mistakes to Avoid While House-Shopping\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">When buying a home for the first time, it\u2019s understandable to make mistakes. However, some things can be avoided if you take the time to truly assess what kind of&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"78736\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-78736 -->        <\/div>\n      <\/div>\n    <\/div>\n  <\/div>\n\n  \n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Can closing costs be negotiated?<\/h2>\n\n\n\n<p>There is some negotiation possible, and the following includes ways to possibly lower your closing costs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Did you review your loan estimate form?<\/h2>\n\n\n\n<p>Before you close on your home, your chosen lender will provide you with a contract covering all the details of the agreement. In it, you\u2019ll find information such as your monthly payment amount and interest rate, as well as the percentage owed for closing costs. Remember that things like a low credit score can contribute to a higher interest rate, so try to have more than the minimum credit score.<\/p>\n\n\n\n<p>In reviewing these numbers, you might find that your closing costs are higher than what you\u2019re willing to pay. Don\u2019t hesitate to shop around at other banks and lenders, which might offer you a better deal, including lower closing costs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Did you research lender fees?<\/h2>\n\n\n\n<p>Double-check the lender fees you have to pay to obtain your loan, as you can sometimes save money here, too. Your lender will charge an origination fee. You probably can\u2019t get out of paying this, but your loan agreement could contain other negotiable fees. There&#8217;s no harm in asking your lender about these.<\/p>\n\n\n\n<p>This is an area in which it would help to have other loan possibilities for reference. If your chosen lender tacks on more fees, show them your options and negotiate a lower rate or move on to a new lender.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Do you know what you are paying for?<\/h2>\n\n\n\n<p>It\u2019s vital to understand closing costs before you go into negotiations. Of course, you have your responsibilities as the buyer\u2014you must pay the application fee, attorney fees, credit report fees, and more. But you should also know what the seller should cover on their end of the deal.<\/p>\n\n\n\n<p>For example, they should contribute to the closing costs, especially when the market is working in the buyer\u2019s favor. To that end, the seller should also cover the real estate agent commissions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Can you add the closing costs to your mortgage?<\/h2>\n\n\n\n<p>You can lower or avoid paying closing costs upfront by folding them into your mortgage. Some lenders will be open to this option, wherein they pay the closing costs for you upfront and then tack that price into your home loan.<\/p>\n\n\n\n<p>This will save you cash in the short term, but you will end up paying more for your closing costs over time since your loan repayments will come with added interest.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Did you look for financial aid?<\/h2>\n\n\n\n<p>First-time homebuyers might be able to get a bit of financial relief when they purchase a property. Many grants can help lower the costs of the home-buying process to encourage more people to get into the real estate market.<\/p>\n\n\n\n<p>For instance, if you choose a Fannie Mae loan to buy one of their foreclosed properties, you might be eligible for closing costs as low as 3%. There are also loan programs for those who have, for example, poor credit history, a low down payment, or veteran status.<\/p>\n\n\n\n<p>Local governments or nonprofit organizations may also provide grants for the home-buying process. These programs mostly favor first-time home buyers, and they help cover your down payment and\/or closing costs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Did you research vendors?<\/h2>\n\n\n\n<p>As soon as you get your loan, skip to the part where it describes the vendors who can help you through the closing process. Sometimes the people selected by your bank will charge more than ones you can find yourself.<\/p>\n\n\n\n<p>Do your due diligence to ensure you have the least expensive vendors possible. You can ask your lender for other potential vendors they might not have listed on the loan. This research could save you hundreds of dollars in closing costs.<\/p>\n\n\n\n<div class=\"wp-block-group alignwide\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n<\/div><\/div>\n\n\n\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-2\/3 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Buy your first house with your eyes wide open<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Outsmart the world\u2019s most common financial trap! From BiggerPockets CEO Scott Trench and podcast co-host Mindy Jensen, learn how your home purchase can destroy your wealth\u2026 or generate even more. <\/p>\n\n\n\n<div id=button-custom-event-block_64134fe56b103 class='button-custom-event'>\n      <a href=\"https:\/\/store.biggerpockets.com\/products\/first-time-home-buyer?utm_source=blog&#038;utm_medium=marketing_block\" x-on:click=\"window.analytics.track(&#039;Blog Block | Publishing: FTHB&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/lower-closing-costs&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Get Your Copy<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/3 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/03\/first-time-home-buyer.jpeg\" alt=\"\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\">How to lower closing costs<\/h2>\n\n\n\n<p>When figuring out how to lower closing costs, it&#8217;s most important to understand where you can save money. Even though each real estate deal is different, there are typical closing costs that homebuyers can expect.<\/p>\n\n\n\n<p><strong>Application fee: <\/strong>Before applying for a mortgage, ask your lender if they charge an application fee. If so, make sure you understand what it covers. Application fees are sometimes negotiable, but you might need leverage in your negotiations. That\u2019s why it\u2019s essential to shop around and know what other lenders charge for an application fee.<\/p>\n\n\n\n<p><strong>Appraisal:<\/strong> In most deals, you\u2019ll need to pay an appraisal company to assess the property\u2019s fair market value. Sometimes though, you won\u2019t have to pay this fee, so be sure to discuss with your lender.<\/p>\n\n\n\n<p><strong>Association dues:<\/strong> If you\u2019re buying a property in a homeowners or condo association, you may have to pay your annual association dues at closing. The buyer and seller can split this cost, and you may owe only a prorated amount of the association\u2019s annual dues if you buy a property partway through the year.<\/p>\n\n\n\n<p><strong>Attorney fees:<\/strong> Some states require lawyers to review a real estate transaction\u2019s closing documents. If so, both the buyer and seller have their own legal representation.<\/p>\n\n\n\n<p><strong>Courier fee:<\/strong> Your lender may use a courier to deliver documents required to close a deal. Doing so can expedite finalizing the transaction, but you may pay for this courier fee as a result.<\/p>\n\n\n\n<p><strong>Credit report fee:<\/strong> Your mortgage lender will run a tri-merge credit report. The reports are your credit scores and history from the three major credit bureaus. Depending on the lender, you may not get charged for this, but you&#8217;ll have to ask.<\/p>\n\n\n\n<p><strong>Discount points: <\/strong>These \u201cpoints\u201d represent money you pay your lender at closing to receive a lower mortgage rate. One discount point equals 1% of your home loan amount in exchange for dropping your interest rate by 25 percent. For example, if you pay your lender $1,000 on a $100,000 mortgage loan, your 4% interest rate drops to 3.75%.<\/p>\n\n\n\n<p>It\u2019s important to have a conversation with your lender about what your options are with these points, especially since points are not required. Using points makes sense on paper but paying more upfront may not work for everyone. For those who don\u2019t plan to live in their home long-term or are likely to refinance, this isn\u2019t the best option.<\/p>\n\n\n\n<p><strong>Escrow deposit and fee: <\/strong>Many lenders require you to have an escrow account for your expected property taxes and homeowner\u2019s insurance premium. Your lender makes your insurance and tax payments for you using the money you deposit into your escrow account.<\/p>\n\n\n\n<p>If you\u2019re required to set up an escrow account, a title company, escrow company, or a lawyer will manage the process. They\u2019ll charge a fee for doing so. Often, home buyers and sellers agree to split this cost. You can ask about these costs upfront to make sure they fit within your budget.<\/p>\n\n\n\n<p>(Pro tip: It&#8217;s always a good tip to confirm with your city or county that your taxes have actually been paid!)<\/p>\n\n\n\n<p><strong>Flood hazard determination fee: <\/strong>The U.S. government requires a flood risk assessment for all real estate transactions. A third party handles the evaluation, and they\u2019ll charge you a fee for their service. You\u2019ll have to pay for flood insurance if they determine your property is in a flood zone. Be sure to keep this possible expense in mind when choosing a property.<\/p>\n\n\n\n<p><strong>Homeowner\u2019s insurance: <\/strong>Homeowner\u2019s insurance is usually not required by law, yet most lenders require it. It is a good idea to have it in case of damage to the property, and you\u2019ll usually pay your first year\u2019s insurance premium at closing.<\/p>\n\n\n\n<p><strong>Mortgage broker fee: <\/strong>You can hire a mortgage broker to help you find mortgage loans. If you do, they\u2019ll charge you a commission based on the percentage of your loan amount. This is usually between 0.5% and 2.75% of the property\u2019s purchase price. To save money, you could look for loans yourself.<\/p>\n\n\n\n<p><strong>Origination fee:<\/strong> Most lenders charge a loan origination fee when processing your home loan application, which is usually 1% of your loan amount. Not all lenders charge an origination fee, however, so, again, it\u2019s essential to research different mortgage lenders.<\/p>\n\n\n\n<p><strong>Private mortgage insurance (PMI):<\/strong> Lenders usually require you to carry private mortgage insurance if your down payment is less than 20% of your home loan amount. The PMI covers you if you miss a mortgage payment. Lenders have varying PMI percentages, but they usually range from 0.5% to 2.3% of your loan amount. There are four ways to pay for your PMI premiums:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Upfront: You pay the entire cost of your PMI at closing.<\/li>\n\n\n\n<li>Split: You pay part of your PMI costs upfront, and your lender folds the balance into your monthly mortgage payment.<\/li>\n\n\n\n<li>Monthly: You pay nothing on your PMI at closing, and your lender adds your entire PMI balance to your monthly mortgage payment.<\/li>\n\n\n\n<li>Lender-paid: Your mortgage lender covers your PMI costs in exchange for raising your interest rate; this method can save you money at closing but cost you more over time.<\/li>\n<\/ul>\n\n\n\n<p><strong>Recording fees: <\/strong>Local governments require a copy of your title before it will recognize you as the property\u2019s legal owner. Your title company usually handles this transaction, and they\u2019ll charge you a fee for that service. However, that\u2019s not always the case, so be sure to ask.<\/p>\n\n\n\n<p><strong>Title search fee:<\/strong> Before you can purchase a property, someone must verify its ownership. A title company handles this process, ensuring no one else can claim the property after you purchase it. The company charges a fee for this service, and it often comes hand-in-hand with title insurance, which protects the buyer from future claims against the property. This fee varies by location and property; it ranges from $200 to $1,000. You can save money by searching for a title company within your budget.<\/p>\n\n\n\n<p>Overall, to save money, you should compare lenders and their fees to make sure you\u2019re getting the best possible deal. You\u2019ll see these fees on a document called a closing disclosure. These are the different costs to consider when buying a home.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Closing costs are expenses in the home-buying process that typically equal 2% to 5% of your loan\u2019s value. Borrowers might be able to reduce closing costs with the right negotiation tactics. Here are several tips to try before you sign off on your purchase.<\/p>\n","protected":false},"author":120484,"featured_media":139973,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7119,7390],"tags":[],"class_list":["post-111685","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-biggerpockets-daily","category-acquiring-property"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/111685","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/120484"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=111685"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/111685\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/139973"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=111685"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=111685"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=111685"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}