Higher Closing Costs in Escrow: Why & How to Avoid Them
Have you ever been excited to reach escrow only to be surprised by higher-than-expected closing costs? You're not alone. In this blog post, we'll explore why your closing costs might be higher in escrow and how you can avoid them.
Why are my closing costs higher in escrow?
There are a few reasons why your closing costs could be higher than you originally anticipated. The first reason is that the home you're buying is actually worth more than the appraised value. If this is the case, you'll have to bring more money to the table at closing.
Another reason for higher-than-expected closing costs is that the appraisal came in low. In this case, you won't have to bring more money to the table, but your loan amount will be lower, which means you'll have to pay more interest over the life of the loan.
The last reason for unexpectedly high closing costs is simply because the seller decided to increase the price of the home. This doesn't happen often, but it's important to be aware of the possibility.
How can I avoid higher closing costs in escrow?
The best way to avoid unexpectedly high closing costs is to be as prepared as possible before entering into escrow. First, make sure you have a realistic idea of what your home is worth by doing your own research or hiring a professional appraiser. Second, try to negotiate a contract with the seller that includes language about who will pay for certain repairs or upgrades that need to be made before close of escrow. Finally, remember that the seller isn't required to disclose everything about the property upfront; if there are any red flags, it's worth paying for a professional inspection before entering into escrow. By taking these precautions, you can avoid being blindsided by higher-than-expected closing costs.
Unexpectedly high closing costs can spoil the experience of buying a new home, but there are steps you can take to avoid them. Be sure to do your own research on your home's value and try to negotiate who will pay for repairs upfront. Remember that sellers aren't required to disclose everything about the property, so if there are any red flags, pay for a professional inspection before entering into escrow. Taking these precautions will help ensure that your experience with closing costs is a positive one.