Today, buyers need to bring their A-game in order to compete with other hopeful homebuyers in the same market. In a seller’s market like the one in Virginia, it can be challenging for buyers to get a great deal on their new home. But that doesn’t mean it’s impossible. With a little creative thinking and negotiation, you can get the lowest closing cost in Virginia possible when purchasing a new home.
If you don’t feel confident negotiating on your own, you may want to consider hiring an agent to help you out. Real estate agents are trained negotiators who will fight for you, often without charge if your house purchase is contingent upon using their services. So whether you’re ready to look for your perfect home or are just interested in learning more about real estate as an investment opportunity, this article has what you need to know about closing costs when buying a home in Virginia.
Ask the Right Questions for closing costs in Virginia
The first step in lowering your closing costs in Virginia is asking the right questions. This includes getting a good feel for how your real estate agent operates and the type of lender you’re working with. If you’re not sure what you should be asking, then this is the perfect opportunity to do some research. Reading online reviews and talking to friends who’ve recently bought homes can give you a good idea of what to look for when choosing your agent and lender. With that information in mind, make a list of specific questions you want to ask your real estate agent and lender.
When you meet with your real estate agent to discuss home financing options, don’t stop there. Be sure to ask questions about their process and how they plan to help you get a great deal on closing costs. You can also use that opportunity to get a sense of their personality and see if you two are a good fit. In fact, doing so is a great idea because it gives you a chance to see what they know about the market and the home you’re interested in buying. This allows you to get a feel for whether they are knowledgeable enough to give you accurate advice.
Negotiate and Be Firm
Home buyers often feel like they can’t negotiate when it comes to closing costs because they think it’s a standard fee that has to be paid. In order to get the lowest closing costs possible, you’re going to have to be firm and negotiate for what you want. This doesn’t mean you should be rude or disrespectful to your real estate agent, but rather you should communicate what you’re looking for and be willing to walk away if you don’t get it.
That being said, it’s important to keep this in mind when negotiating for closing costs: Your real estate agent is working for you, not the lender. In that case, the lender gets their money regardless of whether you pay it in closing costs or not. The only way they lose is if your home purchase falls through, meaning they’ll have less money to go towards your loan.
If your real estate agent is unable or unwilling to negotiate, shop around. While this may sound like an extra step, it’s actually a smart move. Not only will you get a better deal on your closing costs, but you’ll also get a better overall deal on the purchase of your new home. While you’re shopping around, keep in mind that you don’t want to shop for lenders the same way you would for a car. In other words, don’t go to a few lenders, pick their best rates, and go with whoever has the lowest. You want to shop around in order to get the most personalized service, meaning you want to talk to several lenders and compare what each of them has to offer. You may even want to consider shopping around for a mortgage broker who can help connect you with lenders and make the whole process easier.
Escrow and Title Commitments
Your real estate agent will likely ask you to put money into escrow as a way to secure your portion of the closing costs. This is standard, but it’s important to know how much money you’ll need to put into escrow and how it’ll be applied toward your closing costs. For example, if you’ve decided on a purchase price of $300,000 and 10% down, your closing costs are going to be about $10,000.
Your real estate agent will likely ask you to put approximately $4,000 into escrow for your closing costs and $6,000 as a down payment. Of that $4,000 that’s going into escrow, $1,500 will be released when your appraisal comes back with an acceptable value and $2,500 will be released when your home is approved for closing. When it comes to your title commitment, you may be surprised to learn that it’s not actually used to pay for closing costs. Instead, it is a security deposit that goes to the title company as collateral while they do their due diligence in making sure there are no liens on the property or problems with the title.
Before you close on your home and sign the final purchase agreement, you’ll have what’s known as a final walkthrough. At this point, you’ll have a chance to review your home and make sure everything is in order. This is also a great opportunity for you to ask your real estate agent about their estimated closing costs and see if you can negotiate for a lower amount. As such, you’ll want to arrive for the final walkthrough prepared with a list of questions about your home’s condition and the amount you expect to pay in closing costs. If you’re unable to negotiate a lower amount, you can at least put your agent on notice that you’re aware of the amount they’ve estimated and you’re keeping a close eye on it. This can sometimes be enough to make them change their estimate.
Home buying can be a stressful process, especially if you’re trying to get the lowest closing costs possible. In order to do so, you’ll want to ask the right questions, negotiate for what you want, shop around for better rates, and arrive for your final walkthrough prepared and ready to negotiate once more.