When it comes to real estate closing costs for buyers, doing everything within your power to reduce them to the absolute lowest expense seems like a no brainer.


Unless you’re among the likes of Richard Branson or Mark Cuban in terms of financial stability, it takes a substantial amount of time to save for a down payment alone on a house, let alone the closing costs involved.


The rest of us sacrifice our avocado toast and cold brew coffee for the free donuts and lukewarm in-office drip in hopes that setting aside a few extra dollars a day will eventually compound into enough to invest in our piece of the American Dream. Many home buyers think they have everything in order for purchasing their new home, including the minimum 3 percent down payment, only to be slapped with another round of expenses: real estate closing costs.


Like most new homebuyers, you are more than likely interested in reducing any of the external costs associated with getting you into your new place — including the closing costs. While there is no way to completely avoid these expenses that occur in every real estate transaction, there are a few ways you in which you can make your closing payments vastly less. Lucky for you, our real estate and home closing experts at Close Happy® are here to explain the closing costs to you as well as outline a few tips and tricks to reducing yours.


About Closing Costs

Most real estate closing costs end up being roughly 3 to 6 percent of the purchase price of the property. Why such a broad range you might ask? Taxes. Buying a home means paying taxes, upfront transfer fees, and other loose ends that need to be tied up at the time of your closing.


Need to add some more salt to the wound? Real estate closing costs increased 6 percent last year and now average upwards of $2,500 on a $200,000 loan, according to Bankrate.com. They also state that origination fees (lender commissions) also increased 9 percent and appraisal fees rose 1 percent.


Just to make matters even more confusing, if you aren’t using a national title company for going about your real estate closing process, your closing costs will vary greatly by location. So depending on where your dream home is located could mean your closing costs are upwards of the average 3 to 6 percent range.


Now that you are legitimately concerned about the daunting idea of tackling a real estate closing, let’s dive into some ways in which you, the homebuyer, can circumvent some of the added expenses that a closing procedure entails.

How To Reduce Real Estate Closing Costs For Buyer


Look For A Loyalty Program

Many banks offer assistance with the closing costs for homebuyers if they use the bank to finance their purchase. For example, Bank of America offers reduced origination fees for preferred reward members. So if you’ve been a loyal customer to your bank for quite some time, this is an option worth looking into.


Schedule Your Closing For The End of The Month

This is one of the oldest tricks in the book, but it remains an effective one nonetheless. If you close at the beginning of the month, say August 3rd, you have to pay the per diem interest from the 4th to the 31st, while if you close on the 30th, you pay for only one day of interest.


Get The Seller To Pay

The majority of home loans allow sellers to contribute up to 6 percent of the sale price to the buyer as a credit for closing costs. It’s an extra incentive to seal the deal with you, the buyer, and is also a tax-deductible expense for the seller. While this is an option certainly worth giving a shot, don’t expect much of a positive reaction from your seller if you happen to be buying in an incredibly hot market where demand is much greater than the supply of real estate.


Wrap Closing Costs Into Your Loan

Since you’re more than likely already borrowing hundreds of thousands of dollars, how much harm is really done in tacking on a few thousand more? Lenders will undoubtedly charge you extra for this, but it does serve as a viable option for getting into your new home with less cash upfront.


Save On Title Insurance

Instead of obtaining your title insurance through the title company that your local lender automatically provides for you, stand up to the lender and tell them you want to use a national title company instead. With Close Happy®, you will receive all of your title services — from the initial request for title insurance all the way to the closing document submission and policy prep — all for one flat rate, no matter where your real estate closing is taking place. So don’t simply settle for whatever title company your lender assigns you. You have a choice in the matter!