Closing Costs Archives - John Lawrence

Get Paid To Refinance: How Negative Closing Costs Work If you want to save money on your home loan, you might be thinking about refinancing your mortgage. You might be able to replace your existing mortgage with a home loan that has a lower interest rate. Even a single point reduction in your interest rates could save you tens of thousands of dollars over the life of your loan. Before you refinance, be sure to ask about closing costs. Because you are replacing your existing home loan with a new one, you may incur some closing expenses. On the other hand, you could also have negative closing costs. In this case, you might get paid to refinance. How does this work?

The Lender Credit Exceeds The Loan Costs

If you receive a lender credit that is greater than the value of the closing costs, then you could get paid to refinance your home loan. For example, your closing costs could be $2,000. Then, your lender credit could be $2,500. In this case, you would get paid $500 for refinancing your home loan. Why would you receive a lender credit, and how can this exceed your closing expenses?

How To Qualify For Lender Credits

You receive lender credits if you refinance to a lower rate that offers a lender credit. For example, at the original home loan closing, you might have paid points to get a lower interest rate. With lender credits, the lender is paying you to refinance.

If you qualify for a lender credit, there are several ways you might receive this money. The money could be used to prepay your mortgage interest, it could be placed in an escrow account to cover your homeowners’ insurance or property taxes, or could be directly applied to the principle of your home loan, reducing the amount of money you owe.

Always Look At Closing Costs During The Refinance Process

There are a lot of moving parts if you decide to refinance your house. Even though it may sound complicated, it could save you tens of thousands of dollars while freeing up additional cash. If you have owned your home for several years, it might be time to refinance. Reach out to a professional to learn more.

Three Major Mortgage Mistakes Which Are Sure to Increase Your Closing Costs When shopping for a mortgage, it is important to take closing costs into account. While some closing costs are the same for all lenders, different programs may add or reduce some of the burden borrowers face when closing on a home loan.

Let’s take a look at some major mistakes that could result in borrowers paying more than they need to in closing costs.

1) Failing to Take Property Taxes Into Account

Property taxes are generally put into an escrow account that is established prior to closing on the home loan. In most cases, a homeowner will have to pay 12 to 14 months’ worth of property taxes prior to close.

This can represent several thousands of dollars or more depending on the property taxes associated with a property. While everyone has to pay property taxes, finding a home in a low tax area can significantly reduce the cost of closing on a loan.

2) Failing to Ask Lenders for Credits Toward Closing Costs

A lender may have a program in place that enables them to give a borrower a credit toward applicable closing costs. While this generally may not count toward the down payment, it can still be a significant help for first-time buyers or anyone else who may not have thousands in a bank account ready to pay for lawyers or titling fees.

Depending on where the property is purchased, there may be programs available that provide funding for those who promise to stay in the property for a certain amount of time.

3) Failing to Ask the Seller for Concessions

The seller of a property may offer up to 6 percent of any closing costs associated with the sale of the property. While a seller does not have to offer any concessions, they could potentially provide hundreds or thousands of dollars that may not need to be repaid.

In addition to closing cost support, a seller could also provide appliances or other items that can further save a buyer money during and after the purchase is finalized.

A home buyer can save a lot of money by taking simple and common sense actions. By doing research into cost saving programs and credits toward closing costs, those who may have felt that home ownership was beyond their reach may be able to achieve their dream. To learn more about closing costs, you may wish to talk to a mortgage professional in your area.

How Negative Closing Costs Work

Major Mistakes Which Are Sure to Increase Your Closing Costs

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