Negotiate Your Closing Costs
At the end of the home-buying process, you will be faced with closing costs, the fees due at signing required to complete a home sale. Closing costs can be expensive, but some of those fees may be negotiable—and you can ask the seller to cover some or all of them.
Veterans and military members in particular can tap into closing costs savings. When you buy with a VA loan, there are certain closing costs that the VA does not allow home buyers to pay. These include pest inspection fees, mortgage broker fees, and more.
Title companies, attorneys, inspectors, and other third parties may also offer military discounts.
To be sure, there’s no getting around closing costs, no matter the financing path you choose. But you can take a few different approaches to tackling these costs and fees when it’s time to wrap up your home purchase.
The nature of the housing market may dictate whether the buyer or the seller picks up various closing costs.
If it’s a buyer’s market—a bit cold and homes aren’t selling well—sellers may be more willing to bargain and take on some closing costs.
If it’s a seller’s market—the market is hot and homes are selling quickly—the seller has the advantage and little incentive to give the buyer a break.
However, you shouldn’t accept any fishy-looking fees without asking about them first.
e the GFE to the final closing costs statement and the HUD-1 settlement statement to look for big differences.
Some fees are generated by third parties and typically don’t change very much, no matter where you find your loan. Then there are additional expenses you can’t control, like taxes and government fees.
Negotiable fees are generally found in the 800s section of the GFE. They may include the following:
It’s your right to question anything on your HUD-1 and GFE documents, so do ask questions if you believe a cost is too high or doesn’t make sense.
So how much can you ask the seller to pay? It depends in part on the type of home financing. You can typically ask the seller to pay up to 3% toward your closing costs in a conventional transaction and 6% in an FHA purchase.
The VA allows sellers to pay all of a buyer’s mortgage-related closing costs and up to 4% toward prepaid expenses and other concessions.
Sellers may want to see you increase your offer on the home to offset their concessions, but keep in mind the property will have to appraise for that higher amount.
If a seller won’t budge, another option may be to have your lender cover your closing costs. Lenders will typically give the buyer a higher interest rate and use a lender rebate to pay those fees.
As you review your closing costs, be your own advocate. Always make sure you receive a thorough explanation of any fees that seem unusual, unnecessary, or just too costly.
Go over these documents in detail with your real estate agent, and plan your closing cost strategy before making an offer.