Saving on Closing

Buying a house isn’t a simple process. One of the more confusing aspects of the process is closing costs. What do they encompass? Who pays them? Is there any way to reduce the price? Here’s an attempt to clear up some of the confusion.

What Are They?

Closing costs are fees tied to the purchase of a home that are paid at the end of the transaction. The official “closing” occurs when you get the title of the property from the seller. Fees associated with closing can include anything from credit report checks, application fees, appraisal, home inspection and more.

Who Pays Them?

Both sellers and buyers pay closing costs, but what you’ll pay depends on a variety of factors, like the current market and what you’ve negotiated with the seller.

Can You Save?

According to US News, the easiest way to reduce closing costs is to target lender-paid or seller-paid costs. Reducing lender paid costs involves asking the lender to pay all your closing costs. In exchange, the lender will typically increase your interest rate to recoup the costs. With seller-paid costs, you ask the seller to let you raise the overall offer in exchange for a credit that will be used to cover closing costs. Essentially, you’re financing the closing costs into the transaction. You can also shop around for title insurance and — if you’re in a low income bracket — you could possibly qualify for homeowner assistance. The savings at closing are there to be had, you just have to try.