Buying or selling a home, for many people, is the biggest transaction they will make in their entire lives. Because of this, it is important to have the best information at your disposal before heading into such a monumental deal.
Through smart negotiation, you can help reduce many of the costs associated with the purchase or sale of a house. Closing costs can typically total up to 7% of the home’s closing price, so making sure you reach a reasonable number can greatly reduce the total amount paid on the sale or purchase of a home.
The most important thing to remember when buying or selling a home is to make sure every transaction is done in writing. While a handshake agreement may make you feel better about a purchase or sale, it is important that you get the listing, sales, and bank/lender agreement contracts all in writing.
Knowing all of this, it is important to figure out which aspects of these three contracts are negotiable. Being aware of this information can potentially save you thousands of dollars when buying or selling a new home.
Title Insurance
Often the biggest expense as it relates to closing fees for a buyer is title insurance. Essentially, title insurance protects the lender and sometimes the owner from a possible loss of property if someone else claims the property.
While this rarely happens, it is essential for every home buyer to buy title insurance. On average, title insurance costs anywhere from $1000 to $2,500 and is a one-time cost. Most lenders will provide buyers with a title company for the purchase, but buyers can always choose their own title company if they wish for a possible cheaper rate.
Discount Points
Discount points are a savvy way for a buyer to get a lower mortgage rate over the life of a loan. Typically, one discount point costs around 1% of the total loan amount and usually lowers your rate by about 0.25%.
Also, you can apply for lender credits, which are essentially the opposite of discount points. These reduce the size of your closing costs but also increase the interest rates on your mortgage.
Non-Negotiable Costs
