In Utah, closing costs are one of the seemingly unavoidable expenses you just have to deal with when getting a mortgage. Actually, these fees could never be removed, but it’s really not about their existence. It’s matter of who’s paying them.
Unless you take a no-cost mortgage, you’re technically responsible for paying for these costs at settlement. But even in a no-cost home loan, you’d have to take a slightly higher interest rate in exchange for not dealing with such fees later on. So, you’d still have to pay one way or another.
Whether you directly pay for them or not, your primary goal should always be to reduce your out-of-pocket expenses upon closing your mortgage. Fortunately, there legitimate ways to keep them to a minimum.
Negotiate to Keep Them Down
Ironically, the best way to minimize your closing costs is to simply ask. Almost every item in your home loan is negotiable, and these fees are no exception.
But don’t just come up with a number and expect the lender to willingly accept it right away. You must, of course, make sure you’re asking for a reasonable price. And if you want something from the lender, you must also be ready to make an irresistible offer. Be prepared to make a compromise.
Get Help from the Seller
At times, you may convince the seller to contribute some money to help you pay the closing costs. Especially if the seller wants to get the property sold ASAP, the concession can be extremely beneficial to both parties.
There are, however, some limitations to seller contributions. In addition, a number of factors have to be meticulously considered to determine the extra price the seller could shell out. This is why it’s important to speak with a broker to help you with this complicated task.
Use Lender Credit
Like in no-cost mortgages, the lender may provide you a credit to help cover the portion of the closing costs in exchange for a little higher rate. For instance, the lender may offer you a 4.25% mortgage rate in Sandy or Salt Lake City with a $4,000 credit, instead of a 4% rate with a $4,750 worth of closing costs.
The key is to carefully analyze both offers to see which one makes more sense to your situation.
Reducing the size of your closing costs can give you some peace of mind, especially if you don’t have a lot of cash on hand. Less out-of-pocket expenses mean fewer worries.