Negotiating Your Closing Costs with a Dallas Mortgage Firm

Finding your dream home in Dallas can be more complicated than you think. From researching the best available real estate options to settling on a price with the seller, there are several milestones you have to achieve in order to start living the life of your dreams. Yet as you come closer to the final stage, you’re concerned about those extensive closing costs and exploring ways to get rid of them (or at least minimize them), to get hold of your finances. 

The good thing is homebuyers can negotiate some of their closing costs with a Dallas mortgage firm either by themselves or through their agent or a mortgage lender. 

In today’s guide, we will cover everything related to real estate closing costs and the ways to avoid them.

How much are closing costs?

Homebuyers typically pay up to 2% to 5% of their home price on average as a closing cost. But obviously, this is just a rough estimate as there are a number of factors that affect the final closing cost of an asset. This includes the total cost of your property, the area or vicinity where your home is located, and the process through which you’re buying or refinancing your home. 

Apart from this, the closing costs also vary by state and credit score. Speaking of the statistics, the national closing costs for a single-family property back in 2021 were around $6905. 

Now paying a closing cost and moving into your new property right away is definitely an option. But do you ever buy any expensive thing, such as a car or a stereo system, without researching ongoing market prices? No, right? The same is the case with closing costs. While shopping around for mortgages, finding the lender whose deal won’t cost you an arm and a leg is crucial. By cutting these additional costs here and there, you can save enough money to buy something essential for your new home. 

But for this to happen, you have to follow certain strategies that will help you negotiate closing costs with your lender like a pro. We will have a look at some of those strategies in a moment, but before that, make sure you know about all types of closing costs and their sources. 

Types of closing costs

Closing costs come in different forms and sizes. Some of them are associated with your lender’s fees, while others relate to Government/Federal taxes. Every mortgage broker/lender has their own fee requirements. You can talk to them and negotiate over the fee they charge for themselves. But there’s no room for negotiation when it comes to state taxes, recording fees, or other country-imposed charges. 

Generally, all homeowners have to bear these closing costs on the purchase of their new home:

  • Loan origination fees
  • Home inspection fees
  • Credit check
  • Home Appraisal
  • Application charges

Strategies to reduce closing costs

Now coming to the real question, ‘how can I save money on closing costs?’

The short answer to this is to know the types of closing costs that are associated with your home-buying process and identify what’s negotiable. To make things simpler, we have listed here some of the most effective tips you can follow to save on your mortgage closing costs significantly:

Read and compare lenders’ loan estimate forms

Your lender is supposed to hand over a loan estimate form to you within three days of submitting a mortgage application. A loan estimate form is basically an official document that includes the list of costs a borrower has to pay during the entire mortgage process. These costs include the principal amount, interest rate, and monthly mortgage payments. 

Make sure you go through the entire document carefully, especially a section listed on page two of the document that highlights different services a borrower can shop for, including survey fees, pest inspection charges, etc. 

Shop around for lender fees

Because lenders are bound to charge the same fee from all of their clients, you might have hard luck negotiating this amount from your lender. The only thing you can do is look for a lender who charges a reasonable amount of money. At this point, your selection may also affect the costs you may have to bear in terms of surveys and home inspections. Thus try to save the maximum amount of money by finding the right lender for your needs. 

Consider closing cost programs

Many states offer different types of downpayment and closing cost assistance programs. These programs are particularly beneficial for first-time home buyers. You can seek help from such programs and know your options as a qualified buyer. 

Research what the seller is typically obliged to pay

Understanding mortgages and the requirements associated with each program is no joke. As a borrower, you need to research what the seller is typically obliged to pay. While closing costs need to be paid by the buyers, the sellers have to bear the real estate agent’s commission. By knowing who’s responsible for doing what, both parties can easily share the costs and benefit each other without taking undue leverage or advantage.

Look for no-closing cost options

At times, buyers don’t have enough money to pay the closing costs. In that case, they must look for no-closing cost options. Obviously, you have to pay a higher interest rate in exchange for this offer. But this still saves you from paying a lot of money upfront at the time of closing. 

Find lower title insurance

While title insurance is unavoidable and protects you in case there are any unexpected liens against the property, you can still invest your time in finding insurance options with affordable title insurance fees. 

Ask about discounts

Negotiation is a common practice most of us follow when buying anything valuable. The same may be true for your mortgages. Some lenders offer attractive deals, rebates, and discounts to lure potential homebuyers. Always ask for your options, as you never know what you may find.