Many buyers looking at houses for sale in Nanaimo are surprised to learn that closing costs can add almost 5% to the home’s selling price. On a $200,000 home, that’s almost $10,000! When that much money is at stake, it makes sense to look at ways to keep fees low.
Here are 6 easy ways to save on closing costs when you buy a home in Nanaimo.
Common closing costs and fees
Let’s begin by looking at all of the fees that add up to make closing costs so high. There are:
- Loan fees for origination, application, appraisal, rate lock, and mortgage points
- Title fees to perform the title search, flood insurance, and the cost of issuing title insurance for the lender and title insurance for the borrower
- Inspection fees such as pest and mold, professional home inspection, lot surveying, and septic certification
- Prepaid fees for property tax, interest charges, and homeowner insurance
- Recording fees to the government, transfer taxes, and title company fees
- Miscellaneous fees including courier or messenger costs, legal, and notary fees
How to save on closing costs
That’s a lot of fees to think about! Now that you know what they are, here are six proven strategies to save on the closing costs of houses for sale in Nanaimo.
- Compare costs It never hurts to shop around for a lender and title company, especially when there’s so much money on the line. It’s a good way to compare apples to apples and to see how closing costs and fees vary from place to place. When you find someone you like, it’s okay to ask them to match someone else’s quote.
- Review the loan estimate Take the time to sit down and review the loan estimate with your lender. Ask them to explain what each fee is, what it covers, and if there are specific fees you can shop around for. Services buyers can find on their own include home and pest inspections, survey, and title company fees.
- Ask the lender for fee discounts If there are fees that don’t make sense or ones that look like you’re paying twice for the same thing, ask your lender to reduce them or remove the fee completely. When you receive your final settlement statement before closing, compare it to the original loan estimate you received to make sure that unexpected fees don’t suddenly appear just before you close.
- Negotiate closing costs with the seller Asking the seller to contribute money toward buyer closing costs is often times a normal practice when buying a home in Nanaimo. Ask your real estate agent for advice. She’ll be able to give you the professional guidance you need to negotiate a closing cost credit with the seller.
- Delay your closing Closing at the end of the month reduces the amount of prorated pre-paid items such as interest and taxes that the title company will have to collect. This will leave you with more money in the bank to use for moving into your new home. 6. Skip paying points With interest rates as low as they are today, it might not make sense to pay points. A point is 1% of the loan value, so money used to pay for points can quickly add up and can be put to better use.
Keeping closing costs low
Your real estate agent in Nanaimo is another good source for tips and ways to keep your closing costs low. There’s a little work involved, but the money you save could help you buy new appliances or update the landscaping.
Always remember to:
- Compare loan estimates from different lenders
- Identify where money can be saved
- Negotiate on the lender fees
- Shop around for title companies
- Ask the seller to contribute toward your closing costs
- Research a no-closing cost mortgage
- Close at the end of the month to avoid prorated fees
- See if your lender will offer any discounts or credits