Are you considering buying a new home? If you are going to make use of mortgage financing, you may be wondering about some of the costs attached. As you may have heard, all mortgages have a number of fees and other costs that are assessed at the “close,” or when you finalize the loan, in addition to any down payment. Let’s take a look at a few expert tips that will help you to keep your closing costs to a minimum when you take out your next mortgage.
Trade the Lowest Rates for the Lowest costs (via low or no closing cost loan options)
Does your lender offer a loan option with little or no closing costs? While there’s no such thing as free, it may make sense in certain situations to take a slightly higher interest rate from a lender if that rate will cover a portion or all of your closing costs.
This option is typically best for short term financing (if you won’t be in the home long, or plan on refinancing in the near future, for example, from an FHA to a conventional loan). Over the long term, a lower rate will save more money than the cost of closing fees in most situations.
Choose Your Lender Wisely
If you’ve done a good job shopping for your mortgage, you’ve arrived at a lender with fair costs and competitive rates. Rates and fees vary widely from lender to lender, and thought cost and rate isn’t the only thing to consider when choosing your lender, you are going to want to work with a mortgage banker that offers competitive rates at competitive costs.
Lock Your Rate at the Right Time
Finally, don’t forget that most mortgage lenders will offer a “rate lock.” This means that you can have a particular mortgage rate frozen for a set period. This might be 15, 30, 60 days or even longer depending on the terms of your mortgage. Using a rate lock can ensure that you keep a lower mortgage rate, even if interest rates were to change significantly in the meantime. If you’re working with an experienced loan officer, they’ll be able to help you lock in at an optimal time, either saving you money, or at least protect you from an environment where low rates are getting more expensive.
There you have it – three tips that you can use to ensure that you keep your closing costs as low as possible when taking out your next mortgage. For more info on your options and to learn about Mason Mac’s competitive products and prices, be sure to reach out to your local Mason Mac loan officer today!