Financing in 90501>Question Details

Bart, Home Buyer in 94538

Closing cost and Lender fees?

Asked by Bart, 94538 Sat Dec 11, 2010

Can the closing cost and lender fees be included in a conventional mortgage?

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My question is for information purposes. I have never purchased a property using a conventional loan. Conventional loans seem to be cheaper than FHA loans, because of the upfront mortgage insurance.

I like Trulia because I can ask a question of something I don’t and get a lot of good answers.

Thanks you guys

Bart
0 votes Thank Flag Link Sat Dec 11, 2010
Hello Bart,

One think you did not mention was if the property you were considering was a short sale property.

I have seen situations in which the short sale lien holder will not approve the short sale for a buyer using a conventional loan who wants to be given a credit for recurring and non recurring closing costs. (They approve the short sale but deny the request for closing costs.)

I have then seen the same short sale lien holder authorize short sales with a credit for recurring and non recurring closing costs, but only for FHA or VA loans.

Best of luck to you,

Edward

When It's Time To Sell Your Home, Over Paying Is Over Rated
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Edward Sorensen
Broker/Owner
Sorensen And Associates
DRE# 01724671
http://www.SorensenAndAssociates.com
0 votes Thank Flag Link Sat Dec 11, 2010
Bart,
On a purchase you may be able to absorb all or part of your closing costs with a higher interest rate on your mortgage.
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Sat Dec 11, 2010
On a refinance, assuming you have positive equity yes.
On a purchase however, you cannot finance closing costs and lender fees into a transaction as you don't have any equity in the property to cover those costs (which would be your money). The costs associated with the purchase would be paid for in one of three ways, or a combination of several:

1. as eluded to previously - a "seller concession" would allow you to apply funds towards "non reoccurring" costs (as the name implies, items that will not occur again and are one time associated with the service). *Keep in mind that "seller concessions" cannot be applied toward down payment however, only closing costs.

2. increasing the delivery rate via the lender - by increasing the rate delivered you can often cover much if not all of the costs associated with the transaction depending upon what the lender can provide (no all lenders offer rates with enough adjustments to cover the costs in full)

3. cash on hand - this would be in addition to your down payment

I hope that provides the clarity you need Bart. I'm not going to send you to my web page, if you desire my assistance you are welcome to reach me directly anytime.
Best of luck on your needs.
Yours to count on,
Paul~
0 votes Thank Flag Link Sat Dec 11, 2010
Hi Bart,

The answer is yes. But the question is what are you trying to achieve? Lower out of pocket costs. Is that in your best interest?

Jacob
http://www.swanloans.com/
0 votes Thank Flag Link Sat Dec 11, 2010
Scott and Catherine brought up two very good points. One address the "folding" of closing costs into the loan amount and the other is a seller credit to the buyer for closing costs, which include loan points, title fees, escrow, etc.

I am assuming that this is a purchase and not a re-finance. If you have not made a purchase offer yet, ask your realtor to include closing cost allowance in the purchase contract. You may not get everything you ask for, but if you do not ask for it, you will definitely not get it if it is not in the contract.

If you have an accepted offer on a purchase, check with your lender.

Salim Patel

Ca DRE License # 01241927
The Real Estate Group
3480 Torrance Blvd., Suite 100
Torrance, Ca 90503
(310) 528-4271 Cell
http://www.investinsouthbay.com
0 votes Thank Flag Link Sat Dec 11, 2010
You should have your loan officer go over the different types of loan programs they have and the costs associated with each. You can also ask the seller to pay 3 to 6% of your closing costs and prepaids. So ask what the limits are with that type of loan so you can =write it into your offer.

Please see my blog with tips and advice on getting a mortgage in todays market
0 votes Thank Flag Link Sat Dec 11, 2010
Yes they can be. You will end up paying a higher interest rate to take advantage of a no cost loan. So it is advisable to do a calculation based on how long you plan on keeping the loan. There is a break even point which is generally about 2-3 years, beyond that you will save more money if you choose the lower rate option.

I used to be a mortgage broker, so feel free to contact me if you have any further questions.

Regards,
Catherine Bedrossian
(310) 383-4212
0 votes Thank Flag Link Sat Dec 11, 2010
Yes; by selecting a higher than par rate, all your fees can be included.
Web Reference: http://WeFixRates.Com
0 votes Thank Flag Link Sat Dec 11, 2010
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