How to Reduce Closing Costs on Your CT Home Purchase

Closing costs on your home purchase can sometimes equal as much as 4 percent of the actual purchase price, but there are a few very good ways to lessen the sting.

1. Your agent can negotiate a seller concession for non-recurring closing costs as part of your purchase agreement. Non -recurring fees are paid once, and never again, also known as one-time charges.

2. Schedule your closing for the last day of the month.  You may have heard that a lot of people close at the end of the month, but no one has ever explained why. The reason is simple- In Connecticut, as well as the throughout the country, interest is paid in arrears. That means that within your closing costs statement, your principal and interest payment will pay the interest for up to a 30-day period immediately preceding your closing date.

For example, let's say your principal and interest payment is $599.55, with a loan amount of $100,000. With interest at 6% per annum, and amortized for 30 years. If you close in October, you will make your first payment for December 1,  and you are actually paying the interest for the entire month of November.

If you are close on your home loan on October 15th, you will prepay interest from October 15th through October 31st to the lender.  Your first payment will be due on December 1. That would be about $300 in pre-paid interest charges due at closing.

If you close on your home on the 29th, however, the pre-paid fee would only be about $40. BUT close on the second day of the month, and that $40 becomes $580.

The time of year also plays a factor, and each town is different. What I mean by that  is that each town collects property taxess on a schedule, and they are NOT all the same. Some towns collect quarterly, adn some towns collect just twice a year. Depending on the town, and what month you are buying a home in that town, the amount of escrow  needed for property taxes on closing day can vary by as much as SIX months.
THAT'S A BIGGIE.

3. One other very well kept secret  (but not with my clients) is that I always tell my buyer clients to try and negotiate the Title Insurance. You get this from your attorney, and the last time I checked, attorneys made a whopping 40 PERCENT commission. Since they are already charging you for tehir services anyway, if you fuss a little but, you might be able to get them to come down on either the Title Insurance, or their fee.

Closings costs do not have to take a bite out of your wallet. Your agent, mortgage professional and attorney should all be able to show you various ways to reduce the fees.

Buying or Selling a Home in Fairfield County?  Contact us!

If you have a question about buying or selling Real Estate in  Fairfield County, and are in need of representation, I invite you to contact me. I know the market like the back of my hand, know marketing inside and out, am a skilled negotiator- and I'd love to be on your side :) - Judy

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