You’re a savvy home buyer and you’ve factored in all of your closing costs ahead of time—you know exactly what you’re going to have to shell out. But did you know that some closing costs can actually be negotiated? If you answered “no,” you’re not alone.
Thanks to Dodd-Frank, all mortgage lenders must charge the same underwriting, origination, administrative, and preparation fees. These can’t be negotiated. And there are other fees that, try as you might, you can never negotiate. So to save you some time and energy, here’s a guide to what you can and can’t change when closing on a new home.
- Lender fees: Your mortgage lender charges a number of fees that include application fees, processing fees, and underwriting fees, which vary slightly by lender. These can’t be negotiated, but the right mortgage broker can help you find the best lender for you.
- Appraisal fees: Getting your new house appraised is a necessary (and important) part of the buying process, and the fee for appraisals runs anywhere from around $250 to $350, depending on the home’s location and size. You can’t negotiate this, but in the end it’s a small price to pay for your dream home.
- Taxes: Ahh, if only we could all negotiate with the government. Unfortunately, you will have to pay state recording and transfer fees, and you can’t get around this, or change them.
- Home insurance: Your lender will require that you purchase a home insurance policy prior to purchasing a new home, the costs of which can range from $300 to $1000 per year. The good news? You can choose any home insurance provider you want, many of which will offer discounts based on varying conditions. Take a little time and shop around, and you could save a significant amount of money.
- Title insurance: Title insurance is another necessary fee, and one that will save you in the end, but cost you upfront. It protects you in case there are any liens against your property, and can range quite a bit, from $1,500 to several hundred thousand. Luckily, you can shop around for title insurance, and you can negotiate. It’s another instance where doing your homework will really come in handy.
Remember this: Once you find the right mortgage broker, he or she can get you the best mortgage type and rate, and can offer money-saving advice along the way.