1). Don’t Overpay On Discount Points
Discount points are a one-time, upfront fee paid at closing which gets a homeowner access to lower mortgage rates than “the market”. They’re paid as a percentage of your loan size such that 1 discount point carries a cost equal to 1% of your loan size.
2). Opt For Low- Or “Zero-Closing Cost” When Appropriate
Opposite from paying discount points, mortgage borrowers will typically have the option of doing a low-cost or zero-closing cost mortgage. Loans of these types don’t reduce the total cost paid — they reduce the cost paid by the borrower.
3). Choose The Proper Loan Type For Your Needs
Today’s home buyers have access to a bevy of mortgage products. Buyers can choose from between conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, and more. Each loan type meets a specific borrower need.
4). Choose A Realistic Rate Lock For Your Loan
Another way to reduce your loan closing costs is to lock your mortgage rate for the appropriate time frame.
Rate locks are typically available in 15-day increments up to 60 days, and then in 15- or 30-day increments thereafter.
Mortgage lenders “charge more” for longer rate locks. A 30-day mortgage rate lock is less expensive than a 60-day rate lock, for example, and a 60-day rate lock is less expensive than a 90-day rate lock.
