After all the haggling you do to get the best price on your home, and all the work you put into your credit to get the best interest rate, it can be disappointing to realize that closing on a home comes with thousands of dollars in bank and legal fees. You need to pay for multiple inspections, an appraisal, attorneys’ fees, title insurance – and that’s just the tip of the iceberg.
The good news is that many of the fees rolled into your closing costs are negotiable. You can shop around for your own service providers, and potentially find a better deal than your bank is offering you. Let’s take a closer look at some of the fees you can negotiate.
A real estate attorney will be a part of your home purchase to make sure that the legal transfer of the property from seller to buyer happens successfully. In some states, there’s just one real estate attorney involved in the transaction, but in other states, both buyer and seller are required to have a real estate attorney. Still other states don’t require a real estate attorney to be involved in closing at all – but that doesn’t mean you shouldn’t use one to make sure nothing weird happens with your home purchase.
However, you may be able to shop around for a more affordable attorney than the one the bank recommends. If you’re using a buyer’s attorney, you can definitely shop around. Fees for an attorney can start at around $300 and go up to as much as $1,000, so it’s worth shopping around.
Most home purchases include a home inspection during the contingency period, and you’ll most likely pay the home inspector at the time of the inspection – so that’s technically not part of the closing costs. Nevertheless, a home inspection isn’t cheap, so it’s worth calling around and getting some quotes. Your real estate agent may be able to give you a list of local home inspectors to contact.
Your home purchase will also likely require a pest inspection, and you can definitely shop around for this, too. You could save a couple hundred dollars by getting quotes. Again, your real estate agent may be able to provide you with a list of local pest inspectors. The only inspection fees that you probably won’t be able to shop for are fees associated with non-conventional loans, like those subsidized by the Federal Housing Administration (FHA), Veterans Administration (VA), or U.S. Department of Agriculture (USDA).
A survey on your new home tells you exactly where your property boundaries are, which can come in handy when you want to put up a fence or when your neighbor wants to cut down “his” tree that’s actually yours. However, surveys cost several hundred dollars, and you may not even need one. Ask your real estate agent to ask the seller’s agent if they have an updated survey. You may even be able to go to the municipal clerk and get a copy of the most recent survey on your own – if it’s fairly recent, it’s probably fine. Otherwise, shop around for the best deal on a surveyor.
Most mortgage brokers in Charlottesville, VA and elsewhere will require you to get lender’s title insurance, which protects the lender against legal issues that might come up with the title to your home – such as, for example, someone else crawling out of the woodwork with a legal claim to your home. You’ll also need to pay for a title search and other related services. Often, the rates for title insurance and title search services are set by state statute, but if not, ask your real estate agent if they can get you a deal on lender’s title insurance.
You’ll need homeowners insurance on your new home at closing, and the cost will be rolled into your closing costs, but you’re responsible for shopping around and finding a carrier that you like. You can save hundreds by comparison shopping for homeowners insurance. If you already have an insurance carrier for auto, life, or other insurance services, consider bundling your homeowners insurance to get a discount.
To get a mortgage, you’ll have to pay thousands in closing costs – but not all of them are out of your control. There are several opportunities to lower your costs by negotiating fees. By shopping around for necessary services, you could knock hundreds, or thousands, of dollars off the cost of your new home.