Previously, we broke down what closings costs entail and which are mandatory. It is widely known that buyers are responsible for paying their closings costs.
These costs are paid upfront at closing and cannot be rolled into your home loan.
However, there is a way to save a little bit at the closing table if you are thrifty enough.
Read on to find out how.
Closing costs
Closings costs are the fees paid for the services involved to purchase your home.
These include, but are not limited to, the title search, appraiser, home inspection, attorney fees, lender and credit fees, and the fee paid to your agent.
Read more about closing costs.
Seller concessions
While these fees are the buyer’s responsibility, there are ways to negotiate with the seller to have them pay a portion, if not all, of your closing costs.
Depending on the type of loan you have, you can negotiate with the seller to have them contribute a certain percentage of the purchase price towards closing.
You can even have these concessions applied towards discount points to lower your interest rate!
Negotiation
If you can cover both your down payment and closing costs, it is always recommended to do so. This will make your offer stand out above the rest because many offers will include the stipulation of seller concessions.
Imagine this: you are selling a house and you have been presented with two offers.
The first being an offer of $206,000 on your home with an asking price of $200,000.
This seems great at first. An offer above asking price!
However, the buyer is also asking for $6,000 in seller concessions.
This tactic is used by many buyers who are trying to essentially roll the closing costs into their home loan.
Beware of this strategy, if the home is appraised for lower than your offer, you could end up losing out on your deal.
And then you have offer number two: The buyer is offering the asking price of $200,000, but they will front all the closing costs.
While this offer is lower than the first, there is less risk involved than with having to provide seller concessions.
Do not be scared off though, it is very common for sellers to help pay for closing costs and this may be an appealing option for motivated sellers.
