Closing costs are the fees associated with your home purchase that are paid at the end of a real estate transaction. They can vary widely based on where you live, the property you buy, and the type of loan you choose. Typically, home buyers pay between 2 to 5 percent of the purchase price of their home in the closing fees. As a matter of fact, on average, buyers typically pay $3,700 at closing. While closing costs are a major burden for any homebuyer and may seem inevitable, there are steps you can take to lower or avoid them altogether.


Work With the Lender


Due to the competitive market, lenders are usually willing to come down on some fees; all you have to do is ask. When you first shop around for financing, take a look at options that may give you a discount on closing fees. Larger banks tend to have loyalty programs that help to lower these costs.


Speaking of programs, military members can take advantage of the benefits from VA loans. Union members can also receive financing assistance from discounts and rebates. For more information on these programs, contact your local Veterans Affairs or union offices to speak to a representative.


Have you ever heard of a no-closing cost mortgage? It’s exactly what it sounds like. However, in exchange for no closing fees with a lender, you will be charged a higher interest rate. Before accepting this kind of deal, do some calculations on your own to see if it is financially worth it.


Work With the Seller


Once you cut down costs with the lender as much as you can, start working with the seller! Avid negotiators can get the buyer to handle the closing costs depending on the agreement you both share. Usually, a seller won’t agree to pay the entirety of the closing costs, so discuss individual fees or simply split the cost 50-50. Another option is to renegotiate the final cost of the house.


When you agree on a closing date, choose a date towards the end of the month. Paid interest is prorated, a detail that tends to be overlooked. Therefore, instead of paying an entire month’s worth of interest, you’ll only pay for a few days.


Another strategy involves talking to your bank about potential discounts and rebates. Some banks have special offers for existing customers, with two examples being: Wells Fargo’s My Mortgage Gifts Program, which rebates eligible borrowers $500 on a home purchase or $300 for a refinance, while eligible Bank of America Preferred Rewards members can save from $200 to $600 on the origination fee.


Our final tactic? Those who have less cash upfront can simply “roll” the closing costs into the total cost of the loan. It’s a great idea for families who want to save money for the future.