Tips for Negotiating Closing Costs

The amount of closing costs for buying a home can often come as a surprise for some homebuyers. You may have spent months or years searching and saving …

Real Estate Agent

The amount of closing costs for buying a home can often come as a surprise for some homebuyers. You may have spent months or years searching and saving for Brampton real estate, only to find you have to pay even more for the closing costs. Closing costs vary depending on the cost of the house, but are typically 2% – 5% the cost of the loan, which can turn out to be tens of thousands of dollars for some.

Purchasing a new home can be a frustrating time and many end up paying the full amount of the closing costs, but you do have the chance to negotiate for a lower price.

Loan estimate form

Your lender is required to provide you an itemized loan estimate form within three days of you submitting your loan application. Carefully reviewing the terms of this form will show you information on your interest rate, monthly payments, and details the closing costs of your loan.

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The loan estimate form allows you to compare closing costs and other important information on your loan so you can be sure you’re choosing the best option.

What services you can shop for

On the second page of your loan estimate form, you’ll find the important “services you can shop for” section. There you can find a list of service providers, such as the survey fee and insurance binder. While your lender is required to give you a list of provider for these services, you aren’t required to use them and are able to shop around to see if you’re able to find less expensive options from other reputable providers.

Lender Fees

You might see fees listed out on your loan estimate form that seem vague, and while the names of different fees can vary from lender to lender, you ask questions about the ones that seem off. Some fees might be non negotiable, but if you ask about each of the fees, you might be able to push for some to be lowered or cut out all together. Even if your lender isn’t willing to budge, it doesn’t hurt to check.

No closing cost mortgage

For some, the cost of the closing cost might just not be do-able. If this ends up being the case, many lenders will offer a no closing cost mortgage. With this, you won’t have to pay the closing costs, but you’ll still be making up for it over time, possibly even more. To get a no closing cost mortgage, you can either roll the amount of the closing costs into your mortgage or take a higher interest rate.

Close at the end of the month

If you’re able to wait until the end of the month to close on your house, you could be paying less prepaid interest at closing. In the end, you’ll eventually end up paying the same amount over time even if you close at the end of the month, but less upfront. If the amount of your closing costs overwhelms you, this could be a good route to bring it down.  

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