Top Tips to Lower Your Mortgage Closing Costs

mortgage loan agreement application with house keyringYou’re probably aware of closing costs that come with a mortgage if you’re contemplating of buying a house. And of course, you’d want to keep those costs at a minimum. In most cases, closing costs could be up to 5% of the purchase price of a house, which is a significant sum. To try to lower your closing costs, consider these tips.

Review and Understand your Loan Estimate

Take ample time to read and understand every single item, ideally with your broker or lender, and ask what every fee specifically covers and how the costs were calculated so you could determine if there are unnecessary or padded fees, advises an experienced broker from PRMI Cascade, a top mortgage company in Seattle. Check if the fees have similar names or else you might be charged twice for the same thing.

Compare Each Cost

This is why shopping around and speaking to different lenders is vital. Doing so would help you compare different costs from different lenders. Aside from obtaining quotes from different lenders, you could likewise obtain quotes for specific services, like the title search, survey fee, pest inspection fee, etc., because you don’t necessarily need to go with the providers suggested by your lender.

Negotiate with the Seller

Depending on how motivated the seller is to close the sale as well as market conditions, the seller might be willing to help you reduce your closing costs. You could try negotiating for a lower purchase price to reduce your closing costs, or ask the seller to cover some fees in your closing costs.

Negotiate Some Fees with Your Mortgage Lender

Try to ask your lender if they could do away with vague fees from your final estimate—this is, of course, considering that there are vague fees. Get the Closing Disclosure document from your lender, which details your final closing costs and compare what’s on your Loan Estimate to this document, and if you see any discrepancies, ask your lender to explain everything to you more clearly.

While you could probably think of many other ways to spend your hard-earned money, closing costs are simply one of those steps you just couldn’t skip on your way to homeownership. Even if you don’t like them, you still need to pay for them. Just focus on lowering your closing costs because that’s all you can do.

Mortgage Loans: What You Need to Know to Build Your Dream Home

mortgage loan in Sandy, Utah
Many homebuyers usually try to secure a mortgage for their first homes. Sometimes, a mortgage loan is the best way to buy your dream property.  For this, you need an understanding of the kind of loan security the lender will ask from you. No lender will rely on good faith alone.

Lenders in many parts of the United States offer different mortgage rates and conditions. For example an asset in a mortgage loan in Sandy, Utah could be different from one in California. In any case, understanding the terms and conditions set by the lender is an essential first step.

What applies as security when acquiring a home loan?

Sometimes, the asset being financed becomes the security for a home loan. At other times, you need to provide other assets to secure the loan. This is what is called a mortgage collateral.

Most lenders will convert the house you are purchasing as the security for the loan. This means that when you receive the loan, the lender atomically gains some rights over that property.  If you fail to repay as agreed in the contract, they could sell the same house to recover the unpaid amount. Alternatively, you could go to lenders who will ask you to provide some other asset as security.  These assets could be real estate, a car, a boat or another house. Some lenders require you to hand over documents such as land titles and deeds,  a ship’s log, or your car registration.

Could you use the same security to acquire several loans?

Sometimes, you may want to use the same security you used to acquire a house to get another loan. This is possible as long the previous lender has allowed it. If the first lender does not permit you to use that security for another loan, you should clear the first loan before using the same asset as security. On the other hand, if the lender allows you to use the same security, make sure to record all transactions and balances for both loans. This is most important, especially when you may need to default on any of the loans.

Owning a home is every person’s dream, but you need to make sure that you’re not going in blindly. Understanding the flexibility of a mortgage collateral is one of the ways that could help you build your dream home.