I’ve been working with several first-time buyers over the last few weeks, and it has been a lot of fun.  We have seen a lot of homes, gotten excited about a few and written offers on a couple.  I love working with first-time buyers, and congratulations to Dr. McClinton, Jill, and Steve on their recent purchases!

One of the recurring themes that comes up with first-time buyers is "how do closing costs work?".  Buying your first home can be a confusing process.  Typically, Aaron will work up a closing cost estimate for them to show them exactly what they’re paying for at closing, and she does a really awesome job of getting the estimates as close to accurate as possible.  In most cases, she’s only off by a few dollars one way or the other, so it’s a great way to show the cost of closing.  And as I worked with these folks, I thought it might be helpful to suggest a couple of ways to possibly save cold, hard cash at closing.  As a general rule, you can assume that closing costs will typically be a 3-5% reflection of the purchase price.  So, if you’re buying a $200000 home, your closing costs are going to be in the neighborhood of $6000-10000 dollars.  How about that math, huh?  iPhone calculator comes in handy!  As a general rule, in our area, expect 3 – 3.5% most of the time.

Some tips to save at closing might include:

• negotiate closing costs with the Seller = at a time when market inventory is slower than normal, sellers are more likely to negotiate either some or all of the closing costs being paid.  In some recent cases, we’ve even been able to get closing costs AND appliances purchased for us.  How’s that for a deal?
• schedule your closing for the last Thursday at the end of the month = when you buy a home, you pay interest on that property from the date you close through the end of the month.  So rather than close on the first day of the month and pay through the entire month, why not close at the end?  Consider the last Thursday of the month, if possible … this will get you as close to the end of the month as you can get and, should a problem arise, gives us an extra 24 hours to resolve it and still meet the end of the month.  Another good way to save some cash!
• Shop Shop Shop! = we live in a free market society, so take advantage of that.   Attorneys fees, insurance costs, title fees … see which vendors give you the best rates for the best services.  Ask your REALTOR to give you a list of vendors they recommend, and start there.  Also, when looking for homeowners insurance, you can sometimes get better rates by including auto coverage as well. 
• And speaking of Title fees = if the previous homeowner has had title insurance with a particular company, ask that company if they would consider switching the policy to your name.  You can sometimes save money by doing that, and it makes the whole process of insuring title just a little bit smoother.

Just some suggestions … everyone wants to save money, and there’s nothing wrong with that so long as the service you receive in return matches your expectation.  Plus, it gives you reason to help out a worthy cause here in the area!  Ask your agent for other ways you might be able to save money as you prepare to purchase your new home.  Congratulations!