8 Strategies to Cut Down Closing Costs on Home Loan
5 minute read
September 11, 2019


Whether you’re refinancing your existing mortgage or buying a home, the process can be quite confusing. There are many things to consider on how you can lower the closing costs on home loan. This includes property tax, interest rate, lender fees, closing fees, and title insurances.

It can be quite difficult to understand all the fees and closing costs involved, and if you’re not careful, it is easy to be overcharged. 

Before you can wrap up your homebuying journey, there are certain fees and services you need to shoulder, mainly the closing costs. The typical closing cost is around two percent to six percent of the home’s purchase price. 

For example, if the house you are purchasing is $500,000, the closing cost is somewhere between $10,000 and $30,000. Can the closing cost still be lowered? 

Yes. Below are some strategies you can use to save a few hundred dollars. 

Shop Around for the Best Mortgage Services 

  • You can negotiate many rates and fees associated with the mortgage process. The key is always to shop around and compare the deals and prices offered by several companies.

Your real estate agent may have some recommendations, but it is still good to look for other options. 

Understand Which Fees Can Change

  • Would-be homeowners usually don’t know that certain fees listed on the loan estimate can change. It is natural to think that the loan fees will stay locked but this is exactly what most companies don’t tell you.

If you were advised to deal with a company recommended by your lender, then your lender’s title insurance, your title services, and owner’s title insurance will never go beyond the 10% at closing. 

  • However, if you decide to work with a service provider that is not listed within the Loan Estimate you acquired, there is absolutely no limit on how much the closing cost can rise. 

Although closing costs have become easier to understand since the Loan Estimate replaced GFE, it is still a good idea to review the estimate very carefully before you decide to take the deal. 

Beware of the Catch That Comes With no Cost Mortgages

  • A lot of mortgage companies offer various kinds of no closing cost mortgage loans. But most of these come with a catch. 

No-cost mortgages are only possible by exchanging a higher interest rate for a lender credit. This lender credit applies to the closing cost. While this is a good option if you don’t have enough funds, it can cost you a lot more over the long period depending on how long you have lived in your home.

Don’t Fall for Significantly Higher or Lower Estimates

  • Closing costs vary from state to state, but most third-party fees should be easily comparable across the country.

However, if you receive a quote that includes a third-party charge that is much lower or higher than the average charge, you should investigate immediately.

You need to make sure that the company provides a satisfactory answer before you decide to make them your insurance provider or lender. 

Compare Loan Estimates 

  • Request loan estimates from various lenders so you can compare their deals. The terms and loan amount varies from lender to lender, so it is essential to understand what you are getting. 

Review all the details of the terms, as there may be unique fees lender may charge you (lenders charge), and you may need to know what are those before you pay the closing costs. While you’re at it, make sure to look at FHA Loans

Ask the Seller to Lower the Home Price  

  • While you and the seller negotiate and already agree on the final purchase price, it is still worth a shot to ask the seller to sweeten your deal, so you can offset the closing costs.

Alternatively, talk to your lender and see if closing cost assistance from the seller will work for you. Depending on how eager the seller is to sell the home, they can contribute a percentage of the sale price to you as a closing cost credit. 

Think about choosing less expensive insurance 

  • Some insurance policies will require you to pay a portion of your premium at closing. If you choose less expensive insurance, you can save on closing costs. 

However, consider the coverage of the insurance carefully. You may do well paying a higher premium than saving a few dollars if the coverage is comprehensive. Less expensive insurance with limited coverage may invite problems in the future. You need to look into this carefully to reduce closing costs on home loan.

Take advantage of military status 

  • Active duty military, veterans, and their family members can benefit from VA mortgage loans, which have zero percent minimum downpayment. 

If you or your spouse qualify, take advantage of it. This lowers the closing costs associated with this loan because it will give you significant savings. 


By now you should know quite a few strategies to reduce closing costs on home loan. For many people, buying a home is one of the biggest investments they will ever make in their lives. Taking advantage of some strategies will help you lessen your expenses in purchasing a home. Generally, without sacrificing the quality of mortgage services you will receive. 

Keep these tips in mind as you shop around for mortgage services, and you can save on closing costs. 

Consult Aceltis Financial Group now for your home mortgage needs. With a commitment to quality customer service, we can help you find the right home loan for you!

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