How To Save Money on Closing Costs: 5 Simple Ways to Save you Money

Apr 15, 2017Reading Time: 4 min

Buying a home will be one of the biggest purchases you’ll make in your life. Adding onto that purchase can seem like a slap in the face, but closing costs aren’t hiding; they’re part of every real estate transaction. Closing costs can add up to around 3% of your home purchase, rising up to around 6% if the home you’re buying resides in a higher tax area. Every state, even every city, has different rules on closing costs that will affect how much you end up paying. Although you can’t get around them, there are a few things you can do to save a buck or two.

All about Those Rates. You’ve probably heard all of the commercials: mortgage rates aren’t the same. Banks offer different rates from one another, enticing people to put their money in their establishment. This can be a good thing for you; look around for the bank that offers the best rate that correlates with your income and financial status. A lower mortgage rate may not be available to you at your current banking facility, but another bank around the corner may have something that works perfectly for you and your family.

Get Rewarded. A lot of banks offer loyalty programs to their customers that can come in handy when you’re buying a car, opening up a loan, or making a real estate purchase. You shop at certain grocery stores to get more air miles or points for free items, so why not choose a bank that offers loyalty perks? Some perks may include help with those closing costs, saving you some money in fees you can’t get rid of.

Wait for it. Interest can be a tricky thing, and trying to avoid it is – usually – not possible. But, waiting until the end of the month to close on your new home can save you from paying the per diem interest. Per diem interest is the amount of interest per day of your loan; this does not (usually) mean that your interest is being compounded daily, but that you would be paying one more day of interest than you normally would if you had closed at a later date. So, if you end up closing on that new home of yours at the beginning of the month, you end up paying for the remaining days of the month; if you close towards the end of the month, you will have less days remaining. This can end in savings for you, but keep in mind that it is not always possible to wait it out and close at the end of the month.

Get a Bigger Mortgage. Although this one doesn’t seem to make sense right away, it’s a move to save money in the present rather than overall. Adding a few extra thousand dollars onto your mortgage, just like you would when doing renovations to your new home, can help you get in your home without the stressors of extra fees. If you’re already feeling tight due to forking over the down payment, putting the closing costs into your mortgage can be a smart move for you. This can come in handy for those that need furniture for their (most likely) larger home or a major appliance that the seller wasn’t willing to part with.

Check out Insurance Companies. Just like banks and mortgage rates, there is more than one place to get home insurance. Why would you pay more for something if you really don’t have to? Check out different home insurance companies and see which one is right for you and your family; there are even some that offer bundle packages with auto, home, and life insurance policies. Being protected doesn’t mean that you have to fall down under financial worries.