Negotiate Savings on Closing Costs

There are several ways to make sure your closing costs are as low as possible, and they all involve negotiation. First, negotiate with the seller to take over as many expenses as possible. Don't let tradition or custom get in your way; just because the "buyer always pays for the survey" doesn't mean the seller can't pay for it in your case. Also, keep in mind that FHA and VA loans do not allow points; thus any points in financing these loans must be paid by the seller. Even if you are planning to use a conventional mortgage, see if the seller will pay for some points.

Second, shop around for the best mortgage terms. The firm with the lowest interest rates may also have the highest closing costs, so you will have to make some choices. By shopping around, you can compare the settlement costs as well as the interest rates. You may be able to negotiate with your lender to waive or reduce certain fees. In competitive financial markets, some lenders may be willing to cut some fees to get your business.

Third, negotiate with your attorney on his or her fees. Although attorneys may base their fees on a percentage of the price of the home, you may be able to negotiate to pay an hourly rate. Also, you may decide that you also need to rewrite your will now that you have a major asset in your estate. If you are equity sharing, you will need a legal contract to that effect. By packaging several legal services together (real estate closing, equity sharing contract, will), you may be able to get a reduced rate from your attorney.

Closing costs that are most likely to be negotiable, either with the seller or the lender, include application/origination fees, credit report fees, points, attorney fees (yours and the lender's), document preparation fees, surveys, inspections, money to the seller, and escrow funds from the seller (for cleanup, radon mitigation, and the like).