Negotiating Closing CostsOctober 8, 2012
In today’s market, buyers and sellers need every advantage they can find and one of those advantages is being able to negotiate closing costs. Once, it might not have been possible, but today, you can shop around. Mortgage experts recommend borrowers contact as many as a dozen lenders while shopping for lower closing costs. While some lenders will refuse to give estimates, many will do just that. Banks will often at least give a rough estimate, even if they’re not as complete as a mortgage company.
As a rule of thumb, closing costs will run the average of 3%-5% of the total price of a home, so with your calculator, you can figure out a range of costs. This is how you make sure the cost for each mortgage isn’t higher than the norm. Don’t focus on the closing costs to the exclusion of the interest rate though, experts say. Mortgages with lower interest rates typically carry higher closing costs in the form of points and other fees. If a buyer is planning on staying in the home for many years, sometimes it’s better to consider higher closing costs, as long as the interest rate is lower. Though at the closing table, you may incur more out-of-pocket expenses, in the long term, you save money—and who doesn’t like that?