Upon purchasing a property, it is important to prepare more budget for closing cost. However, learning the tricks to suppress closing cost is as much as important. Below are several more tips to keep your closing cost minimum!
Title insurance check
Defects in property title, such as lawsuits and liens can cost lenders and homebuyers more. Title insurance can protect you from this.
First off, a loan title insurance policy is a requirement if you want to request a mortgage loan. The lenders will need it to protect their interest in your property until you refinance or pay off all your loan. Most of the times, the cost of the lender’s policy is weighed on the homebuyer.
Investor Junkie also recommends purchasing the homeowner’s title insurance policy. This will give you assurance over your ownership rights on the property. You only need to pay once for coverage that lasts for as long as you own the property.
Additionally, when you own an insurance title, you may apply for a reissue rate. If you receive an insurance policy from the seller, you can renew the policy. Reissue rates are generally lower in price, thus allowing you to save more money.
If possible, try as much as possible to still purchase a title insurance policy. Though it might cost you some, it really helps you from avoiding more expenses in the end. Issues related to an uncovered lien, especially, could cost you more in the future.
Closing cost saving trick: pay at the end of the month
When you take a loan to purchase your home, you will need to pay for the interest on the settlement day. The interest is accrued between closing and the first mortgage payment. Note that this acts as a part of the closing cost. For example, if you close on December 4, you will pay for 27 days’ worth of monthly interest. However, you will only need to pay for two days’ worth of monthly interest if you close on December 29. Thus, scheduling your closing near the end of the month could end up with less amount of interest to pay.
Investor Junkie shares another quick tip to count how many you can save money. Start by multiplying your loan amount by the interest rate, this is the formula to know your annual interest expense. Then, divide the number by 365 to find out your daily interest charge. Multiply the final number to the days left in the month. The final result is the estimation on how much you can reduce your closing cost.
Read also: Property Owning: Suppressing Closing Cost (Part 1)
Follow and join us on Youtube, Instagram, Facebook, and Twitter to be part of the trader community in Asia