When you purchase a home, you'll have lots of things to think about concerning money and financing. From coming up with your down payment to figuring out what your monthly payments are to trying to worrying about interest rates and debt to income ratios, money is what drives the entire deal. That's why it's so easy to overlook another aspect of buying a home – closing costs. Those closing costs can add up quickly, and those looking to reduce expenses when buying a home may want to consider seeing if the seller will pay the closing costs. FTHF.com has gone to great lengths to locate brokers, lenders and banks that allow sellers to pay closing costs for first time house buyers. Take a minute and complete the quick form above so that we can connect you with a company that underwrites loan programs endorsing seller-paid lending costs and mortgage fees.
First, you'll need to understand the basics of closing costs. Closing costs are essentially all of the fees that come along with buying a home. Lenders, realtors, attorneys, and others will all likely contribute to closing costs. These costs will include, but aren't limited to:
Usually, the overall total of closing costs are roughly between 2 and 5% of the total cost of the home, and you'll get an estimate up front as to roughly what they will likely cost. Obviously, since closing costs average out at around $3,500 to $4,200 in most cases, those fees add up.
Some motivated sellers may actually agree to pay those costs instead. Those selling properties who want to unload them quickly will often agree to pay the closing costs, and in these cases they'll usually use the money that you spend on the home to pay off the closing costs. To improve your odds of convincing a seller to do so, you should pay as close to the full asking price of the home as you can afford and be ready to close the moment that they agree. Also, don't make too many large, excessive demands of the seller.
Not all loans allow the seller to pay closing costs, but in general you'll have no problem setting up the process. If you do, they work pretty much as you would expect – once you've made the purchase, the seller will pay the closing costs to the appropriate lender or organization.
It's also worth noting that in some cases, closing costs will often be automatically handled. In particular, if you purchase a HUD home, HUD will often pay the majority of closing costs for you. This way you don't have to worry about convincing a seller to take care of those costs for you. Not all situations allow this, but those that do could be worth looking into further.
You may also be able to agree to pay a portion of closing costs while the seller pays the remainder, if they don't agree to pay the costs entirely on their own. No matter what, you do have options. It's not always possible to convince a seller to pay closing costs, but it may be something you want to look into since doing so might help you lower the overall initial costs of taking out your loan.
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