How To Lower Your Mortgage Closing Costs
One of the main expenses when purchasing a new home is the closing costs. These have increased within the past several years due to higher lending costs which are being passed on to potential buyers, Luckily there are a few ways to keep these costs as low as possible.
Some home buyers make the mistake of overpaying on discount points. These are fees that are closed whenever a mortgage is closed and provides the buyer with rates that are lower than average. The amount that is paid is based as a percentage of the purchase price. Paying discount points may be advantageous for buyers who plan to pay off their loan over a long period of time. However discount points will also lower a loan's APR. Experts recommend that buyers pay the number of points that is right for their case which in some cases may be none.
Another option is for buyers to select low or zero-closing costs if possible. In this case the mortgage lender will cover the closing costs for the buyer. These options may be suitable if you expect mortgage rates to drop in the future or if you plan to refinance within the next year and a half.
Last but not least is selecting the proper home loan for your financial needs. For example, if you are a first time buyer, have limited funds for a down payment or less than stellar credit FHA loans may be an option. However FHA loans require a higher than average closing cost at 1.75% of the total loan amount, Buyers will be able to save more in this area if they are able to qualify for a conventional home loan.VA home loans and USDA loans also require upfront closing costs.
Resources : loanDepot
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