Four Ways to Save Money on Closing Costs

Buying a new home with today's mortgage rates can be one of the most exciting things you do in your life. If you have done your homework, you have calculated the cost of mortgage payments, insurance and taxes to make sure you can afford to pay for it. But did you consider paying the closing costs? Depending on your individual purchasing situation, closing costs can cost anywhere from hundreds to thousands of dollars that you may not have expected. Fortunately, you can do some things to save money on your closing costs. Follow the tips below so you can leave the deal with more money in your pocket.

Negotiate with your lenders. Many lending institutions are willing to negotiate the prices of many of their fees. If they won't negotiate, you may want to consider finding a different lending company. Find a lender who is willing to explain the various fees to you so you know exactly what you are paying for.

Ask for a Good Faith Estimate. A Good Faith Estimate, or GFE, is an estimate about how much you will be charged when closing on your new house. Rates vary between mortgage companies so you can do some research and find a company that charges lower closing costs. You can get a complete list of fees from most lenders. If they will not provide you with this, choose a different lender. With all of the competition in the mortgage industry these days, it is easy to move on to another company and still that is just as good as the last one.

Decide on a mortgage lender. You may have a long list of possible lenders and you will probably be tempted to choose the company with the lowest closing costs. However, you must also consider the company's background, longevity, reputation and its willingness to negotiate and spend time explaining the process to you. Paying a little extra will likely give you a company with better customer service and it will make you more comfortable as you go through the home buying process.

Ask sellers to share the closing costs. With the problems in the mortgage industry, it is not difficult to find someone who wants to sell their home as quickly as possible. With this type of mentality, it may be easy to find a seller who is willing to share or even pay all of the closing costs just to get out from under their mortgage. Sellers who have had their home for sale for a long period of time are often willing to pay at least some of the closing costs so they can move on and be rid of their house. Even if they are unwilling to share the costs, it never hurts to ask!

Few things can burst the excitement of buying a home more than finding out that you have to pay closing costs that you did not consider. If you are not prepared, you may not even have the money at the time to cover the fees. This may even prevent the deal from being finalized and you might have to start all over. Make sure you know how much you need at the time of closing to ensure that this does not happen to you.