While buying a house is a dream for many Americans, unexpected hurdles can come up during the closing process. Many first-time buyers are thrown for a loop when they witness the astronomically high closing costs.
This post, published in the First Time Home Buyers group on Facebooks, was inspired by a user speaking on such a scenario. The user wrote, "Won't have the money for closing cost. It turns out more than what I expected. How can I back out? I know I’m losing money. But I don't have what they are asking for and I didn’t qualify for assistance programs. I have an FHA loan."
The user didn’t see the closing costs until they were close to finalizing their deal. Now, they feel stuck. This can be a nightmare for any potential homeowner, so here are some tips offered by the group to help should this ever happen to you.
Speak with Your Lender
Believe it or not, lenders may be willing to budge on the costs if you speak with them. You can ask for a loan with a higher rate or ask to roll the closing costs into it. You can even compare your itemized “Loan Estimator” form with hidden closing fees to trim the fat. If you know your funds won’t be enough, you can ask for a “no closing costs” mortgage (this can lead to higher mortgage payments).
Ask the Seller
If closing costs get a bit pricey, you can always ask the seller to cover half of or even all the closing costs. You can even leverage the appraiser’s findings to convince the seller to help with closing costs.
Ask Your Realtor
If negotiating with the seller and lender proves unsuccessful, you can ask your realtor to cover some or all the costs in his/her commission. Sometimes, if the realtor wants the sale, they might be willing to work with you. But if things have gone beyond “the point of no return,” you still have time to ask them for a termination offer.
Shop for Title and Settlement Services
When it comes to titles and settlements, you will want to search the web for a title and settlement firm. You may even ask your lender, family, or friends for referrals. Act quickly, as the firm needs time to do their research and prepare your documents. Make sure that the firm you choose can help you with your specific situation.
Postpone Closing
You can lower the closing costs by delaying the closing date to closer to the end of the month. This allows you to avoid the “per diem” or prepaid costs.
When it comes to high closing costs, you can always walk away from the deal. Restarting the house hunting process may be daunting, but sometimes, it happens.
Hopefully, the lesson you take away from this scenario is making sure all your budgetary ducks are in a row. In the end, all things happen for a reason. You are sure to find your dream home soon!
