Question Details

Carol, Home Buyer in DC Metro

Closing or No Closing Help

Asked by Carol, DC Metro Sat Oct 13, 2007

Buyers market in my area.

What benefits:

A. Buy at 269K with 10K in closing from seller or

B. Buy at 259K with no closing help from sellerWhat is the benefit of doing either A or B.

Origiinal asking price $259. This about $40K less then home is worth. Seller maxed out and based on asking of 259 still needs to bring $$ to closing. Should I accept at $259K with no closing help or $269k with 10K inclosing help. First time home buyer

Help the community by answering this question:


Yes, add the closing cost to the sales price. The cost to you in payment is minimal. The freedom it gives you to manage the money you would have had to use for closing is optimum. It is a great question. I hope that you are getting the answers you need to make the best decision for you. Good Luck!
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0 votes Thank Flag Link Sun Oct 14, 2007
Hello Carol. I'd take the one with the $10,000 closing credit as that's money now and it will cost you only about $50-$60 per month to finance the extra $10,000. It will take you around 13 years to pay $10,000 in extra interest. In my opinion, it's better to spread out the payment of the closing cost over the next 13 years than it is to pay out of pocket. Most likely, you won't be in the same house for 13 years anyway as the average person moves every 5-6 years.
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0 votes Thank Flag Link Sat Oct 13, 2007
Ute Ferdig -…, Real Estate Pro in ,
It usually makes more sense to take the closing costs credit. The benefit to you is that funds out of your pocket that you woud have had to expend on closing costs, can instead be used for either 1) buying the new furniture, appliances and landscaping on the new home or 2) increasing the size of your down payment which will result in a better interest rate for your mortgage loan or 3) investing in your IRA or 401K or 4) setting the funds aside into available passbook savings for an emergency fund reserve.
You want to have your closing costs estimated right away' then you can adjust the sellers offer. If the extimated closing costs are only $9,000 you may want to pay only $268 with just $9,000 in cosing cost credits.
I repeat it almost always better to take the closing cost credits.
0 votes Thank Flag Link Sat Oct 13, 2007
Jim Walker, Real Estate Pro in Carmichael, CA

At 269k you are borrowing from yourself (Higher mortgage amount), giving a higher payment. However, if your cash is invested and has a higher return then the interest rate/increased payment on your loan maybe the higher mortgage amount is OK. Consult with a tax advisor.

Also, higher sell price yields more property tax as a norm. Lastly, will your closing cost be 10K or more? If not, can you use them somewhere else?
0 votes Thank Flag Link Sat Oct 13, 2007
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