How To Save Money On Mortgage Closing Costs?

Answer 1

One of the real sticking points in getting a new mortgage loan or refinancing an existing mortgage is the cost involved. A fairly typical mortgage closing can set you back a few thousand dollars or more. While it may seem less significant in light of the undoubtedly large loan you’re taking out, that still amounts to a lot of money it’ll cost you to get a loan.

But there are ways to save on those costs. It may come at the cost of a little work and some forward thinking but result could see you cutting your closing costs significantly.

Part of your decision on what to do to save on costs will hinge on how long you plan on remaining in your house. If you plan on staying in your house for the long haul, it probably makes sense to obtain the lowest mortgage rate you can at the possible expense of higher closing costs. Mortgage brokers and banks typically issue several different rates for 30 year loans, for example. You can choose to get a lower rate on your mortgage but it will cost you more at closing. In this scenario, the money you save monthly in interest on the mortgage will likely far outweigh any increase in closing costs so it makes sense to pay for the lower rate.

Conversely, if you’re planning on moving again in a couple years or so, you might want to opt for the higher rate at a lower cost. The reason being is that you likely won’t have enough time in the house to see your monthly mortgage interest savings offset the increased closing costs it took to get those savings. You’d simply be wasting money getting a lower rate without having the chance to benefit from the rate.

In short, you have to examine your own personal situation. You can save money on your mortgage regardless of how long you plan on staying in your home. You just need to do a little homework to know exactly which card to play.