Reducing Closing Costs when Buying a Home
While buying your own house is a milestone, at the end of the day, closing costs can be a huge burden. Costs arising from paying off your mortgage loan, paying a real estate agent, the insurance company and local authorities can pin down your investments.
Typical closing costs include inspection fees, appraisal fees, taxes etc. Whenever you’re purchasing a home, there’re various ways you can use to cut down on mortgage closing costs.
“Anything that is successful is a series of mistakes.” — Billie Armstrong
Understand the Basics of Loan Repayment
You need to know what is an APR before you can begin slashing down your closing costs. It’s the Annual Percentage Rate which describes that interest rates for a year. You’ll ask your bank to inform you about your APR so that you can plan on how you’ll be repaying your loan. Because lenders usually collect interest for the current month at closing, try to close later in the month. This makes the lender to get only a few days of interest which in turn reduces your closing costs.
Be Opportunistic
In order to cut mortgage closing costs, you need to take advantage of things that boosts your income. Know what is a home equity line of credit, and you’ll for sure reduce closing costs after you purchase a home. It’s a revolving line of credit (much like a credit card) which allows you to borrow as much as you need by just using a credit card that’s connected to the account or by simply writing a check. Since it’s a line of credit, you’ll be making payments based on the amount borrowed and not the full amount available. But you’ll have to use your home as a collateral loan.
Be Smart
People don’t realize that there’re better loan options out there. Whenever you don’t feel okay about the down payment or your credit rating, government insured loans best known as conventional loans might be right for you. For you to be eligible, you need to submit your monthly expenses alongside your income. Your credit history is also a requirement. You’ll be given an interest rate based on the program you choose and your credit score. One can even get a conventional mortgage loan after bankruptcy!
If you really want to minimize closing costs, you’ll have to consider HUD financing. HUD home loans allows many Americans to own homes in a simple and affordable way. With these loans, there’s no reservation required, gifts for closing costs and down payment are allowed, seller can credit up to 6% of sales price towards buyer costs and the closing costs are regulated by FHA. Be smart and take advantage of such programs and you’ll cut down on these costs without having to struggle.