Negotiating Closing Costs Can Save Thousands

By Karen Lawson
LoanPage.com Columnist

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As real estate markets continue to adjust, many sellers are offering incentives to attract buyers. Sellers of new and existing homes may offer to pay all or part of a buyer's closing costs. In order to get the best deal, you should understand closing costs, and do your homework in advance by having an idea of how much a buyer would typically be expected to pay for closing costs. A great way to do this is to use the closing cost calculators available online on mortgage lending and real estate company websites.

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Know Real Estate Values and Typical Closing Costs in Advance

Homebuilders often offer deals that include paying all of a buyer's closing costs. This can save a lot of money, but only if the amount of the closing costs isn't tacked on to the price of your new home. It's a good idea to do some research by comparing home prices in your area. Use mortgage closing cost calculators to establish estimated closing costs, including attorney or escrow fees, appraisal costs, title costs and other costs. Although lender, escrow, and title fees are generally standardized, you may have room for negotiating other costs. If you are buying an existing home, you can ask for credits for repairs, paint, and carpet.

Asking Questions Can Help You Save

You've probably seen or heard the phrase "motivated sellers." If you can find out why the home you want to buy is being sold, it can give you valuable negotiating power. Sometimes, sellers are relocating on a tight timeline, or are selling the property of a relative. These sellers may need to sell quickly to avoid financial problems, and may not mind paying some or all of your closing costs. If your purchase offer is accepted, you will soon receive an estimate of closing costs. Read this document carefully, and understand that it is an estimate only. This statement can serve as a starting point for negotiating your best deal on closing costs.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.

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