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How You Can Save Money In Closings Costs

When you buy a house, you're inevitably going to hear about "closing costs." This general term includes a lot of different taxes and fees that are charged by everyone from the court, to the state, to the septic inspector. Some of these charges are set in stone, like the taxes you owe, but some vary by the vendor or closing company you choose. Although the biggest costs are typically non-negotiable (like taxes), you can potentially save money by shopping for the other services.

To see a breakdown of you closing costs, look at the "Loan Estimate" your lender gives you when you apply for a loan. The "Costs at Closing" section at the bottom of the first page will give you an estimate of your closing costs, followed by a breakdown on the following pages. Some of those costs will be lender fees, some will be taxes, and some will be charges from your closing company. The biggest part of closings costs are typically lender costs and taxes. These include things like points you pay to your lender to get a lower interest rate, funding fees for government backed loans, and taxes and fees to the government and court.

After your lender, the next best place to look for savings is your closing company, but choosing the cheapest is not always the best choice. Keep in mind that your loan estimate will probably not be based on the fees your closing company charges. Typically, you choose the closing company after your lender generates the Loan Estimate. So, the first time you see a detailed breakdown of the fees may be on the Closing Disclosure a few days before you close.

To avoid surprise costs ask your closing company for a breakdowns of their fees and shop around. Buyer's get to choose the closing company! Some closing companies charge a settlement fee and a "title search" or "abstracting fee" as separate line items. Some, like Pike Title, charge a simple flat settlement fee that includes both of these services. Comparing the "settlement fee" of two closing companies may not be comparing apples to apples if one separates their title search fee out and the other does not! After shopping around, you will probably find that the total fees charged by a closing company do not vary a lot - maybe a couple hundred dollars. It is important to consider the quality of closing you should expect and choose a closing company with a strong track record of satisfied clients. Ultimately, choosing a company that does a great job is probably worth an extra $100-$200 in costs since it is a small percentage of your overall costs.


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