What Can Laguna Beach, CA Homebuyers Do to Lower Closing Costs?

The list of closing costs for homebuyers can seem a bit confusing and having to go through each item can get quite overwhelming if you are a first time homebuyer.  But keep in mind that you need to learn about these fees and
charges so you can plan the best way to negotiate with your seller and lending company, and consequently lower your total closing costs when possible. All the closing costs listed here are not set in stone, and there are a few things you can do so you can get a better deal from your home purchase.

1.  Do Your Research About the Fees and Charges Included in Your Closing Costs

Being aware of the fees and charges involved at closing and knowing what they are is key to getting the best deal out of this transaction.  With the right information, you will be empowered to negotiate into reducing or taking out certain fees that seem vague or unnecessary.  While most of this information are readily available online, it is best to talk to an expert so that you are given proper advice.  The seasoned professionals at Laguna Coast Real Estate can guide you and help you to obtain a sense of what is customary in the local area.

2. Consider Buying a Resale Home Instead of a Brand New House

While a lot of homebuyers may prefer to buy new construction, these would typically have a higher purchase price and, consequently, higher closing costs. So, instead of buying new construction, you may want to buy a resale home which may need some updating and repairs, but the overall costs may still be lower than buying a new house with higher closing costs. And, if the property has been well-maintained, you have the security of knowing that it has been “tried and tested” – having been lived in and taken care of, and so any major issues would have been addressed by the previous owner.

3. Shop Around and Request Quotes from Several Different Lenders

Lenders often use different terms for their list of closing costs and they also offer different rates.  So, if you want to get the best rate, what you need to do is shop around for different lenders and request for a quote from each one of them.  With a little extra time and effort, you may be able to save one-eighth percent to a half-percent of your loan.  While this may seem to be a small percentage, a half-percent interest on a $500,000 loan would translate to a yearly savings of $2,500. A recent study shows that a homebuyer can save as much as $1,500 by getting one extra rate quote and at least $3,000 by reaching out to five different lenders.

4. Schedule Your Closing Date Towards the End of the Month

Another way you can further lower some of your closing costs, such as prepaid daily insurance charges, is by scheduling your closing date towards the end of the month. By doing this, your cash outlay for prepaid or “per diem” interest will be lower, as the number of days from your loan closing and the beginning of the next month is less.  If you want to compute for your savings, multiply your loan amount by your interest rate then divide the result by 365 to get your daily interest charge.  Next, multiply that figure by the days left in the month and the result will be the amount you’ll have to pay at closing.  In effect, the lesser the number of days, the lower the interest you will have to pay.