For many people, coming up with the necessary cash to close on a property is a major challenge. Between the deposit monies and the closing costs many people begin to run out of ready cash. Here are two ideas that may help.
Choose your closing date carefully. On the day that you close you will pay the interest due from that day until the end of the month. If you close on the third of the month you’ll pay 27 days of interest at closing. Conversely, if you close on the twenty ninth, you’ll only pay two days of interest. But be careful. If you try to close on the 30th, and many, many people do, if the closing gets delayed by one day you’ll end up paying 30 days of interest. That may cause a bit of a dent in your checking account.
But now let’s get serious about conserving cash in a real estate transaction.
If there were a way to put out, let’s say $10,000 less in cash, you would be interested, wouldn’t you? How about even if it would add $10,000 onto the amount of your mortgage? Less examine this. By adding $10,000 to your mortgage amount, at today’s rate of 4%, with a 30 year payout you would add $47.34 to your monthly payment. That’s $1.58 per day. That’s less than my daughter spends on her morning cup of coffee, rather than brewing a cup at home for about ten cents. You won’t actually be paying that $10,000 for over 17 years. And you probably won’t be in that home in 17 years.
Did I catch your interest yet?
Okay – how do we do this?
We will be asking for a sellers concession, basically we will ask the seller to pay $10,000 of your closing costs. The way it works is, we agree on a selling price between you, the buyer, and the seller. We then say, Mr. Seller – I know we just agreed upon a price, but I want to change the price. I will give you $10,000 more than the agreed price. In exchange you will use that $10,000 to pay $10,000 worth of my closing costs.
Who says no?