One of the top questions that comes up for buyers is how to reduce home closing costs. What are they and what can I do to minimize these costs? Whether you are experienced or new to buying a home here’s an opportunity to gain useful knowledge on home closing costs. Below is a simple framework in a step-by-step process to help you get these answers and keep cash in your pocket!
Step 1 – Identify your closing cost stakeholders
In order to identify your costs, you first need to know with whom those costs are associated with. And so, start documenting all the people and businesses (stakeholders) that you can associate with closing a home deal. Some of the common stakeholders may be a home inspector, lawyer, property developer, the provincial or state government, your lender, and certainly the home seller.
Step 2 – Get the details on closing costs
Identify the costs that go with each stakeholder. Examples may include; the home inspector – cost of inspecting the home; the lawyer – cost of ensuring paperwork and transactions are filed; lender – costs of appraisal, a down payment, bridge financing … Contact your stakeholders for costs details and, ask for a detailed breakdown of costs for reference and to gain more knowledge – this relationship building is also an important step towards future negotiations.
Step 3: Find opportunities
Find opportunities to reduce your home closing costs. Now that you have a list of stakeholders and its associated costs, think about what you have to negotiate on. Could the seller share a cost with you? Does the seller or agent have a relationship with a service need such as a lawyer that could get you a deal? Can you put more money down to remove lending insurance if the deal is sealed at a specific date? What are other lending institutions offering? Do your research to set yourself up for success.
Step 4 – Act Early
Making an effort to reduce your costs early in the process is one of the main success factors to reducing your closing costs! Start putting the information you gathered into action by getting answers and measures for comparison. Where possible, get this information in writing. The actually cost savings should now start coming to view! If you do this last minute, you may just have to pass on cost saving due to scheduling pressures — act early!
In all, while it is useful to know about common home closing costs and some ways of reducing commonly known costs, it’s more important to have your own system for knowledge gathering and then acting early on this information to reduce closing costs – hope this helps and saves you some money!