If you are planning to buy your first home, you probably already know that you need to save up to make a down payment on a house, and you might even know that the minimum amount is usually around 3%. But besides the purchase price of the home and the down payment, there is another set of expenses that you should start saving up for as well. These are the closing costs.
Closing costs can range from anywhere between 3% to 6% of the home’s purchase price. These costs include taxes, transfer fees, and settlements costs for your attorney, title insurance company and lender. The exact amounts may vary depending on which city, state or county you live in, so you will need to do your research and arm yourself with the proper knowledge to figure out just how much you’re looking to spend at closing.
While the thought of having to spend another 3% to 6% of expenses on top of the purchase price and down payment can be discouraging and maybe even overwhelming, there are a few things you can do reduce these closing costs.
Look for a loyalty program with a bank. Some banks offer to help customers with their closing costs if they use the bank to finance their purchase as a way of rewarding their customers for their business.
Try your best to schedule your closing date at the end of the month. This is one of the simplest things you can do to reduce closing costs, because if you close near the beginning, you will need to pay the per diem interest until the end of the month.
You could also try getting your seller to share in the closing costs. Most loans will allow sellers to contribute up to 6% of the sale price to the buyer as a closing cost credit. This is a good way to close the deal, as it serves as a tax-deductible expense for the seller, but don’t expect this to happen if you are planning to buy in a hot market where inventory is rare.
If you are planning to buy a home, let The Incorvaia Team make the process as easy as possible for you. Call us at 440-879-7130 today!
