When you’re buying a house, costs can add up quickly. In addition to the actual down payment for the new home, there are countless other charges and fees that you need to shell out before you can move in.
Thankfully there are things you can do to lessen the financial burden before you close. Here’s a list of things you should do before you sign on the dotted line(s) to potentially save hundreds, if not thousands, of dollars in the long run.
Know when to negotiate
Be your own best advocate! There are many points during the closing process where you should negotiate on prices. For example, often you can negotiate the final price of the home to offset the closing costs. However, your lender may have limits on how much the seller is allowed to contribute.
Try to close towards the end of the month
With a new mortgage loan, the borrower pays the accrued interest from the closing date to the end of the month. The closer to the end of the month you close, the lower the amount of interest you will be required to pay.
Take advantage of the standardized Loan Estimate form
This brand new standardized Loan Estimate form is your greatest asset while buying a home because it lets you easily compare mortgage prices between lenders. The form provides a full list of fees that you’ll need to pay when closing on your home. What’s great is that lenders are required to present you with this form in the exact same format, making it easy for you to compare lenders’ fees. It is now required that lenders provide applicants with this form within three days of your loan application.
When comparing fees, keep your eyes open for fees that don’t appear on every lender’s document. Shopping around and comparing mortgage rates is the No. 1 way to save money during the closing process.
Carefully review the Closing Disclosure form
As you near your closing date, lenders are required to provide you with a second form, the Closing Disclosure form. Make sure you do a final check of this form. Compare it to the Loan Estimate. Did anything change? On the fees that changed, had you received previous notification that they were variable? Were there any added fees on the Closing Disclosure? Make sure you ask your lender any questions you may have on either of these documents. Don’t sign any closing papers with unanswered questions!
Following these steps can greatly reduce the costs associated with taking out a mortgage and closing on a home. As always, your local MidWestOne banker is here to answer any questions you may have during the closing process.