Murfreesboro Realtor, Closing costs explained. In Middle Tennessee Real Estate for buyers & sellers

April 23, 2010 - PRLog -- Closing costs explained  #4
One way of rolling the closing costs into the mortgage is to have a seller concession. It's a little complicated so I recommend you just ask the lender if you can roll the closing costs into the mortgage the easy way. The lender might require that you use the seller concession method, though. If you have to go that route, the way it works is that you and the seller say that the sale price will be about 6% more than the price you agreed on, and then the seller "gives" you that extra 6% that you paid. For example, let's say the price was $100,000 and you're putting 10% down, or $10,000, so you're getting a loan for $90,000. You and the seller decide to go the seller concession route, so you agree that the price should be 6% more, or $106,000. That means you'll now put $10,600 down and get a loan for $95,400. See what happened? You got a loan for $5,400 more than the original loan. That's what you use to pay the closing costs. The seller doesn't keep the extra money because part of the deal is that (s)he gives that extra money back to you at closing.

Ask the seller to pay some of the closing costs. If you're short on cash for the closing costs and can't roll the closing costs into the mortgage, ask the seller if they're willing to pay part of the closing costs. It's not unusual for buyers to ask for this. Usually the worst that can happen is that they say no.
Get the lender to pay the closing costs. If you're short on cash for the closing costs and can't roll the closing costs into the mortgage, some lenders will pay part or all of the closing costs, but in exchange you'll have to pay a higher interest rate on the loan, perhaps 0.25% or 0.50% higher. Ask your lender if this is an option if you need it.

Please feel free to call or email me anytime.
Mike O'Donnell
615-473-5684
Tema@comcast.net
mbororealestate.com

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