It is not uncommon for buyers to find the perfect home right at the top of the their budget. While it is our job as realtors and lenders to always find the most competitive rates, these clients need our expertise more than most.
If getting into a home is contingent on affordable closing costs, there are things that can be done to make this process less stressful.
Lower Your Closing Cost Bill
Depending on the loan amount and the location of the home, loan applicants can pay anywhere from 3% up to about 6% of their home price, in closing costs. While some costs associated with the location of the property cannot be controlled, other steps can be taken to cut costs incurred by the buyer.
Closing costs can accumulate rather quickly as lenders pay for credit reports, attorney services, title services and more.
Those costs are covered by either the borrower, the seller, the lender, or a combination of the three.
It is important to understand what motivates a lender or a seller to cover these costs, as you strategize with your buyers.
Be Aware of the Other Costs that come with a Mortgage Loan
In addition to standard closing costs, buyers should be made aware of other fees associated with a mortgage loan.
Getting buyers ready to hear terms like prepaid interest, homeowner’s insurance, property taxes, escrow deposit for taxes and insurance, and loan discount points, will help the process not seem so daunting, especially to a first time buyer
What Are a Buyer’s Options?
While most people evaluate loans by rate shopping, that is not always the most effective way to choose a loan.
Buyers should know how to compare lender’s charges, and shou
ld understand how to avoid paying too many points on a loan.
When possible, advise buyers to close near the end of the month to help save on prepaid interest.
For some buyers, choosing to buy up the interest rate, and not buy it down with loan discount points, can motivate a lender to pay a part or all the closing costs.
Finally, it is always an option to ask a motivated seller to help with closing costs.
Understanding the costs associated with a loan is important for all the parties involved, as a good deal for a buyer benefits all of us.
Please schedule a time to talk if you are interested in more ways to qualify your buyers. I look forward to getting your clients into the home of their dreams.
