Every mortgage loan incurs fees known as “closing costs” or “settlement fees.” There are different types of closing costs, so let’s take a closer look at what they are.
“Recurring” costs are those that are charged more than once such as: real estate taxes, insurance, and interest. “Non-recurring” costs are one time fees like: discount points, transfer taxes, processing fees, and inspection fees. Recurring costs are fixed while non-recurring costs may be negotiable.
Here are some ideas for saving money on non-recurring fees:
- Get estimates from at least three lenders and pay attention to the closing costs they charge in addition to the interest rate they offer.
- Ask for a good faith estimate from each lender to compare their rates and fees and don’t be afraid to ask questions.
- Ask if there is any flexibility in the lender’s origination and administration fees.
- Insert a contingency in your offer asking the seller to pay all or part of your closing costs.
- Try to close at the end of the month and you will reduce the number of days of interest due at closing.
Shopping and negotiating are the keys to reducing your closing costs.
