Housing markets are starting to cool and a lot of people are nervous about the economy. What happens if there’s a recession or a seller’s market? This guide will help you reduce closing costs in Knoxville so you don’t overpay.
A housing recession is when the housing market experiences six consecutive months of declining home sales. Recessions can be caused by many factors like increasing cost for new construction homes. A struggling economy is also a huge factor. Both inflations and rising interest rates can push the housing market into a recession.
In a market like the one we’re facing, it’s important to save every dollar you can. Everything you can do to reduce your costs and pay less will help. That includes closing costs which often cost thousands of dollars.
Here are some tips to help…
1. Negotiate With Your Lender
A lender doesn’t have flexibility for every cost, but you’d be surprised how many things are variable. They also vary between different lenders. You may be able to negotiate on things like application and loan origination fees, or declining added services with partners like title or appraisal companies.
It’s a good idea to do some shopping and compare prices between several lending institutions. Once you find the best option, you may still be able to negotiate further to reduce some costs. During a housing recession, there are fewer homebuyers. A lender may be willing to give you better prices to gain your business.
In addition, keep in mind that it’s worth pushing back on some of the lender’s fees. Especially if you’re not sure what they’re for or you suspect the lender is nickel-and-diming you.
2. Ask The Seller To Cover Some Costs
Another option that becomes easier for homebuyers during a housing recession is negotiating with the seller. Like lenders, sellers will have fewer potential buyers in a tough economy. When it’s a buyer’s market like this, they may be more willing to cover some of the costs and fees for you.
It’s even worth trying to negotiate the asking price down a bit. If they’re desperate to sell, you could secure a really great deal.
Even if it’s not a strong buyers market, you can still ask because sellers on a tight deadline may be willing to sweeten the deal by covering closing costs. What better way to reduce closing costs in Knoxville than to let the seller pay them for you!
3. Close Toward the End of the Month
Another strategy for lowering your closing costs is simply moving your closing date to the end of the month. This is because your lender will charge per diem interest, which is interest charged for the period of time between when the loan closes and when your monthly payments begin.
Decreasing the number of days your lender can charge per diem interest will naturally mean you some money on interest.
4. Include Closing Costs With Your Mortgage
Even if you can’t get the seller to cover closing costs for you, there may be other options. Closing is often thousands of dollars on top of your down payment and not everyone has that kind of cash. It may be possible to reduce the closing costs in Knoxville by adding them to your mortgage.
Ask your lender if this is an option. Just remember that it will add to your costs over the long term. This is because your interest rate is calculated based on your principal loan amount. Increasing it to include closing will cause you to pay more interest over the life of the loan.
This is an option you may want to use with caution. You should only do it if you absolutely need to.
5. Use Financial Assistance or Discounts
Lastly, there are a number of financial assistance options for homebuyers. They’re available for first-time and low-income homebuyers. You may be able to get assistance for closing fees, down payment amounts, and other costs. Be sure to ask your lender or realtor what options are available in your area.
Another way to lower closing costs is to check if your lender offers any discounts or rebates. For example, if you have a credit card with the bank you’re getting a loan from, they may offer a rebate on your home purchase or loan origination fees as part of their rewards program.
Don’t Spend More Than You Have to on Closing Costs in Knoxville
Let’s face it, even in a housing recession, buying a house is expensive! You’ll never be able to get rid of all costs – nice as that may be. But every dollar you can save buying a house is a dollar you can spend on something else you and your family need.
Another good thing to do is hire a realtor. They keep updated with various savings options and can help you find the best deals and negotiate. Some people believe buying without a realtor will save on commission costs. But a realtor can easily help you save more than the cost of their commission.
An experienced realtor can recommend the best lenders in the area and help you evaluate your options. They can even help you find off-market listings and you can make an offer before they hit the MLS.Check out some of the best off-market listings that could save you money when you buy a house in Knoxville. Even during a housing recession, there are still options to reduce closing costs in Knoxville. Get in touch at 865-365-1670 if you have questions.
