How to Reduce Closing Costs
Our 6 Tips
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Look for a loyalty program. Some banks offer customers help with their closing costs, if they use the bank to finance their purchase. Bank of America, for instance, offers reduced origination fees for preferred reward members. It’s the bank’s way of offering a reward for being a customer.
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Close at the end the month. One of the simplest ways to reduce closing costs is to schedule your closing at the end of the month. If you close at the beginning of the month, say March 6, you have to pay the per diem interest from the 5th to the 30th. But if you close on the 29th, you pay for only one day of interest.
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Get the seller to pay. Most loans allow sellers to contribute up to 6% of the sale price to the buyer as a closing cost credit. It’s a way to seal the deal—and a tax-deductible expense for the seller. Don’t expect this to happen much in hot markets where inventory is scarce (which is almost everywhere these days).
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Wrap the closing costs into the loan. You’re already borrowing probably hundreds of thousands of dollars—why not tack on a few thousand more? Lenders charge more for this, but if you don’t have the cash, it’s a way to get into the house with less cash upfront.
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Join the army. Military members have closing-cost benefits that are often overlooked. Service members and veterans may qualify for funds to help them purchase a home. These benefits are not limited to the VA loan. The key is to do the necessary research to make sure you get everything you are entitled to.
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Join a union. AFL-CIO members get closing-cost discounts and rebates of up to $2,500 on real estate transactions when they get a mortgage through Chase. But only if they live in New York. Check your local credit union's benefits and features.
Thank you for following our Skyrise Real Estate Group How-to blog series. We will continue to provide practical tips and how-to suggestions for all aspects of Real Estate matters.
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