Homeowners are routinely advised to request sellers to shoulder a share of the closing costs. This is good advice, but it isn't always feasible; for example, few sellers will be willing to do that in a seller's market. Luckily, there are still other ways of lowering closing costs; here are three examples:
Shop for Service Providers
Shop for service providers just as you would shop for, say, car insurance coverage by comparing costs. There are service providers that you can't choose, but there are also many that you can choose. For example, lenders usually have the dibs in appraiser selection, but you can choose your own home inspector, title insurer, and settlement company, among others. Once you are clear on the service providers you can choose, shop for the services from different providers and compare quotes to lower your costs.
Understand and Negotiate Loan Fees
Mortgage loans don't come cheap; apart from the interest rates you will be paying for the loan's lifetime, there are some fees you must pay upfront (thereby becoming part of your loan fees). A typical homebuyer may not understand what all the fees mean because some of them don't have standard names across lenders; this means you may end up paying for the same things twice if you aren't keen.
Therefore, sit down with your lender and go through the fees (they will be listed in the loan estimate) to make sure you understand them; you might just be lucky enough to identify some bogus charges. Once you are sure the lender isn't charging you double for some items, negotiate with the lender to knock off or reduce some fees.
Hunt For Discounts
Discounts for closing costs come in different shapes and sizes; you just need to know how to hunt for them. For example, some banks offer discounts on some fees to their loyal customers. Therefore, if your bank is your lender, it doesn't hurt to call them up and ask if they have such a program. There are also professional organizations that offer these discounts to their members; check with the organizations you belong to if you can get some discounts this way.
As you can see, there are other ways of reducing your closing costs without asking the seller for help. You will even be more in luck, however, if the seller does help and you also manage to negotiate for low costs and enjoy a discount here and there.
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