Ah yes. The dreaded closing costs. Many people strive so hard and finally save the necessary down payment. They search and find their dream house. Then someone tells them they need to pay closing costs.
First – what are closing costs?
This is the cash you’ll need to pay out when closing on your new home. Here are a few of the costs:
Attorney Fees
Title Insurance
Flood Insurance (if applicable)
Homeowners Insurance
Closing Fees
Pre-paid mortgage insurance
Bank Fees
Appraisal
and more.
These fees can easily add up to $8000 or more, depending on the homes selling price.
So after you save the down payment, how long will it take to save the closing costs?
But – maybe we can get someone else to pay them. Maybe the seller should pay them.
This happens quite often. Eventually you’ll pay them, but sometimes we can get the seller to front the money. Here’s how it works.
We find the house and negotiate the selling price to a point where the buyer and seller agree. Let’s say we agree on $350,000 as an example. We then say to the seller that we will change the sale price to $358,000, and the seller will pay, from their proceeds, $8000 of your closing costs. The net result to the seller is no change. And most of the time the seller will agree.
Here’s what is does for you. Instead of reaching into your pocket to try and find that $8000, you be reaching in your pocket for the down payment percentage – 3.5%, 10% 20% – whatever your mortgage calls for. If VA Financing, nothing. The balance of the closing costs will be added to your mortgage. The $8000 will only cost you, at today’s interest rates, about $40.00 per month. You won’t pay the full $8000 for 17 ½ years. You probably won’t be living there in 17 ½ years.
Speak with you mortgage rep for more details.