Your Home Sold Guaranteed Realty — The Nathan Clark Team

How To Reduce Closing Costs When Buying a Home in a Housing Recession

Learn How To Reduce Closing Costs in 5 Ways

Wondering how to reduce closing costs when buying your dream home? If you’re planning to purchase a home during a potential housing recession, you may want to know how to reduce closing costs in order to get the best possible deal on your new home.

A housing recession is when the housing market experiences six consecutive months of declining home sales. It’s driven by factors like an increasing cost for new home builds coupled with negative economic activity like rising interest rates.

In this post, our team at Your Home Sold Guaranteed Realty – The Nathan Clark Team will discuss five ways to lower closing costs if you’re planning to buy a home during a housing recession.

What Closing Costs Do Home Buyers Pay?

Many home buyers are surprised by just how expensive closing costs can be on top of the price of a home. On average, they can be anywhere from three to six percent of the total home price. 

Both home buyers and sellers pay closing costs, but as the home buyer, you are responsible for most of them. If you’re wondering how to reduce closing costs, it’s important to keep in mind that the exact fees you pay will depend on your location. 

For example, if you’re buying a home in a flood-prone area, then you’ll likely have to pay flood determination fees. Or you may live in a state that requires you to get a pest inspection separate from the main home inspection. 

In addition, there are optional fees that can add to the price of your closing costs. These are costs like HOA fees, attorney fees, or mortgage discount points.

Be sure to consult with your lender about what fees you can expect. But in general, the most common closing costs include:

  • Appraisal fee
  • Home inspection fee
  • Escrow account funds
  • Loan origination fees
  • Fees to update government property records
  • Mortgage insurance
  • Home insurance
  • Property tax and tax research fees
  • Title search fee and title insurance

How To Reduce Closing Costs in 5 Ways

1. Negotiate With The Lender

The price of some closing costs are determined outside of the lender’s control. But some costs, on the other hand, vary from lender to lender, such as the application and loan origination fees. On top of that, lenders may also have a partnership with a specific title or appraisal company, which might not necessarily be the best deal for you. 

For this reason, shopping around for the lender with the best rates is a good idea to help you save some money. Remember that you can always negotiate with one lender if you find a second one willing to offer you a better price for their services. 

In addition, keep in mind that it’s worth pushing back on some of the lender’s fees if you’re not sure what they’re for or you suspect the lender is nickel-and-diming you.

2. Ask The Seller To Cover Some Costs

One option for reducing closing costs that home buyers don’t often consider is asking the seller to cover some of the fees. It’s also possible to ask the seller if they’re willing to lower the price of the home slightly to compensate for the closing costs.

This strategy primarily works in a buyer’s market, when home buyers have more leverage in transactions. 

However, it may be worth asking regardless of the market because you never know if the home seller is in a hurry to close the deal and get their home off the market. If they have a deadline to sell the house, they may be more willing to sweeten the deal by covering closing costs..

3. Close At The End Of The Month

Another strategy for lowering your closing costs is simply moving your closing date to the end of the month. This is because your lender will charge per diem interest, which is interest charged for the period of time between when the loan closes and your monthly payments begin.

Decreasing the number of days your lender can charge per diem interest will naturally mean you end up saving some money on your interest.

4. Include Closing Costs With Your Mortgage

If you don’t have the upfront money to cover closing costs, one option is to ask your lender to lump your closing costs in with the rest of your mortgage. The catch is your lender will most likely raise your interest rate.

Because your interest rate is calculated based on your principal loan amount, adding your closing costs to your mortgage means you’ll be paying a higher interest rate for the life of the loan.

So ultimately, this plan will save you money in the short term but you’ll be paying more in the long term. For this reason, you should only do this if you absolutely need to.

5. Use Financial Assistance or Discounts

Lastly, there are a number of financial assistance options for home buyers. These programs are designed to make it easier for first-time and low-income home buyers to enter the housing market by covering closing fees, the down payment, or other costs. Be sure to ask your lender or realtor to see what options are available in your area.

Another way to lower closing costs is to check if your lender offers any discounts or rebates. For example, if you have a credit card with the bank you’re getting a loan from, they may offer a rebate on your home purchase or loan origination fees as part of their rewards program.

Work With Us to Buy a Home in New England

While you can’t avoid closing costs entirely, there are steps you can take to reduce the amount of money you end up paying. This all starts with hiring the right realtor to help you buy a home. An experienced realtor can recommend the best lenders in the area and help you evaluate your options. 

If you’re looking to buy a home in New England, then Your Home Sold Guaranteed Realty – The Nathan Clark Team is the best choice. Our professional real estate team can help you learn how to reduce closing costs, so you walk away with the best possible deal on your dream home.

On top of that, we offer several buyer’s guarantees that make the home-buying process as risk-free and stress-free as possible. This includes our Exclusive Buyer Protection Plan and Buyer Cancellation Guarantee.

To learn more about our buyer’s guarantees or what it’s like working with our team in New England, give us a call at 401-288-3557 or fill out the form below.


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